Marx Rules, Mises Drools
(or ‘No Law for the Lions and Many Laws for the Oxen is Liberty’)
A subjective calculation of the value of the Austrian School
by Jack Graham & Phil Sandifer
With thanks to Daniel Harper, for repeatedly pointing in the right directions
There is more than one kind of freedom, said Aunt Lydia. Freedom to and freedom from. In the days of anarchy, it was freedom to. Now you are being give freedom from. Don’t underrate it.
- Margaret Atwood, The Handmaid’s Tale
…all significant concepts of the modern theory of the state are secularized theological concepts…
- Carl Schmitt, Political Theology
Let’s start from first principles.
Murray Rothbard, in his 1976 account of the praxeological method that underpins the Austrian School of economics, says that his is “individual human beings act.” And since he begins with an axiom (a “primordial fact” no less), he asserts, “all the propositions that can be deduced from this axiom must also be true.” Rather more interesting, however, is all of the propositions that are required to reach this axiom. It is, after all, recognizable (whether it wants to be or not) as a restatement of classical liberalism, a fact that is reinforced by Rothbard’s immediate restatement of the axiom as “individuals engage in conscious actions towards chosen goals.”
And yet there is nothing obvious about classical liberalism. Every part of this argument is in fact dependent on a mass of contested epistemologies. Assumptions about the nature of consciousness and free will abound. Meanwhile, a wealth of alternatives lie quietly ignored, or, in some cases, loudly so. Rothbard, for instance, immediately distinguishes these actions from “reflexive, or knee-jerk, behavior, which is not directed towards goals.” For one thing, this seems transparently silly; when one pulls one’s hand away from a hot stove it is clearly a reflexive action, and yet it is also clearly directed towards a goal. This also highlights the strangeness of declaring that goals are “chosen,” a problem that Rothbard only deepens a paragraph later when he notes that “since he wishes to attain these goals, they must be valuable to him; accordingly he must have values that govern his choices.” What are we to make of the notion of an externally governed choice? Or, even more strangely, an internally governed one, with “values” apparently being a part of the self separate from consciousness and choice but that simultaneously governs them? Whatever it is, it’s going to fit awkwardly with the heroic individual at the heart of Rothbard’s liberal praxeology.
And that’s not even getting to the unmentioned alternatives. There’s determinism, obviously, although Rothbard at least means to be rejecting that. But Rothbard also visibly has a dog in the hunt over compatibilism and incompatibilism, seemingly walking into Schopenhauerian compatibilism (as Einstein paraphrases it, “man can do what he wills but cannot will what he wills”) with his notion of value governance, a move one strongly suspects he does not actually want to make. And this in turn ignores the wealth of options that don’t privilege metaphysics, such as ecological views of human action as a (perhaps even the) key component of a larger biological system. Notably, any and all of these approaches, many of which are in most regards only slight variations on Rothbard’s axiom, in turn have propositions deducible from them that are just as compellingly true as Rothbard’s, but often radically contrary. For instance, approaches that situate the axiom “individual human beings act” within the context of the anthropocene extinction quickly produce the proposition “so they should probably stop that.”
Ah yes, the anthropocene… or the capitalocene as some have said it should be called. And here we get to the nub of the matter. Because capitalism is the system Rothbard – and the entire Austrian School - is trying to justify, and it is also the system that – contra his wealth of assumptions – circumscribes a lot of what people do. Individuals can act all they want. They won’t make the end of the world go away, any more than their freedom to quit work can make them free to not starve – especially when the system that surrounds their individual actions convulses and crashes to the ground.
Individual action is a singularly bad explanation for why, ten years ago, human global society itself teetered on the brink of collapse because some people were sold mortgages they couldn’t afford.
RationalWiki notes, amusingly, that these days you can barely talk about economics anywhere online without encountering Austrian School ideologues trumpeting their contention that Austrian-flavoured financier Peter Schiff predicted the crash of 07-08. As RationalWiki points out, this isn’t especially impressive. Loads of people did. And Austrians are constantly predicting crashes. They’re worse than Marxists on that score, who, as the joke goes, predicted four out of the last three crashes. But the real irony is the idea of proving Austrian ideas true using evidence, given that the praxeological basis of Austrian thought means that the Austrians not only admit that their ideas are not based on evidence but also say that evidence cannot prove or disprove anything anyway.
Consequently, Rothbard – reliant as he supposedly is on praxeology – also has difficulties coming up with a convincing account of these rather pressing issues… or rather he would do, if that was what he was really aiming for. Well… he’s not aiming for anything anymore. He’s dead. And hopefully enduring a Dantean contrapasso, probably involving the eternal accusing stares of all the real anarchists who died in the Spanish Civil War. But his approach lives on, sadly. There is a spectre haunting the anthropocene, and the long slump. The spectre of the Austrians. But what haunts the haunter? What is the awful gothic horror interred beneath Rothbard’s shining praxeological edifice?
If that’s what we’re investigating, then - true to the first principles of our subject - we really do need to start with first principles.
*
Praxeology claims to be a method, but it’s actually a method of claims. It is an affect, an aesthetic, a way of making assertions. Famously, beneath its rhetoric, it amounts to a wholesale and impudent rejection of empiricism… all the more impudent because the praxeologists make a habit of lambasting others (rightly or wrongly) for doing what they themselves do proudly. They began this, more or less, very tellingly, by attacking Marxism…. which was projection, as we’ll see.
Of course, it’s not that the praxeologists don’t think there are observable laws in how the world works…after all, they adumbrate their own. It’s just that they think all such laws arise from human behaviour that arises from subjective perceptions. So the laws cannot be scientifically comprehensible via statistical modelling, or even empirical observation.
As Ludwig von Mises, founder of what could be called the ‘second generation’ of Austrians, wrote in his deeply silly book Human Action:
Praxeology is a theoretical and systematic, not a historical, science. Its scope is human action as such, irrespective of all environmental, accidental, and individual circumstances of the concrete acts. Its cognition is purely formal and general without reference to the material content and the particular features of the actual case. It aims at knowledge valid for all instances in which the conditions exactly correspond to those implied in its assumptions and inferences. Its statements and propositions are not derived from experience. They are, like those of logic and mathematics, a priori. They are not subject to verification or falsification on the ground of experience and facts. They are both logically and temporally antecedent to any comprehension of historical facts.
Mises is unambiguous about this: not only shouldn’t you try to verify or falsify praxeological deductions; you can’t.
In a post from 2010 on his Unqualified Reservations blog entitled ‘From Mises to Carlyle: my sick journey to the dark side of the force’, Menicus Moldbug, founder of Neoreaction, declares “Mises is almost never wrong”. Of course he isn’t. It’s easy to never be wrong if you never say anything.
Even Friedrich von Hayek, Mises’ protégé and successor, who nevertheless formally rejected praxeology, claimed, in Individualism and Economic Order, that
All that the theory of the social sciences attempts is to provide a technique of reasoning which assists us in connecting individual facts, but which, like logic or mathematics, is not about the facts. It can, therefore… never be verified or falsified by reference to facts.
That isn’t to say it doesn’t seize upon anything that looks like proof when it can, but that’s because it’s an aesthetic pretending to be a method, so the occasional scob of evidence makes nice decoration. In this, it resembles nothing so much as casuistry - religious apologetics, scholasticism – preserved into late modernity. As we’ll see, this isn’t a coincidence. Nor is it a coincidence that praxeological argumentation strongly resembles the reactionary YouTube sceptic’s technique of spewing unfounded assertions that conform to his sense of truthiness, while constantly declaring himself rational.
In some ways, the praxeological view of people is an improvement on the mythical ‘homo economicus’ of mainstream economics, the perfectly-informed rational actor, maximising utility all over the place with the benefit of his handy pocket preference scale (y’know, like we all have?). For the Austrians, even the market irrationality they admit to is, they say, crucial to all social order. Such order is spontaneously generated, unplanned, by the market, and no other way of doing things is moral or workable. And here we see the anthropocene looming again.
There is some attraction, some superficial plausibility, in the ostensible rejection of the idea that you can quantify human actors with statistics, etc. This is part of why this ideology is so attractive to people who invest a lot of their ego in the idea that they are individualists, rugged or otherwise. But, of course, the cult of the individualist is based on the idea that the behaviour of some humans can always be predicted. The individualist is, by definition, the guy who stands apart from the common herd. They like to wax ruefully realist and accepting about what ‘humans’ are really like, as a way of ruling out utopias - but they implicitly separate humans into the schlubs and the inspired. Even the superficially liberatory idea of ‘self-ownership’, espoused by many praxeological Austrians and libertarians, is a coy way of conceptualising people as commodities… which is probably how the lovers of liberty so often end up defending slavery.
The libertarians’ (or ‘classical liberals’) philosophical excuse for this partiality to the rights and privileges of the ruling class, and the attendant indifference to those of the subject class (whatever the social content of these categories may be at any given time), is that private property is the basis of liberty. But this manages the impressive feat of being both a tautology and a contradiction. It’s a tautology because it assumes the point under question. It’s a contradiction because if private property, while conferring liberty on its possessors, also structurally curtails the liberty of the propertyless, then whither the concept of liberty… except as a luxury to be enjoyed by a few? From here the libertarian is inescapably pushed towards somehow justifying the inequity, towards explaining “Why yes, it is a luxury to be enjoyed by a few – and quite right too!” The justifications are easy to find. You need only look at the many and drastic specific inequities generated by capitalist society, generalise from them, and amputate history and context so that they appear to have no cause.
The necessary amputation of context is actually especially striking in the case of the libertarians, because a whole host of the inequities they seize upon to justify hierarchy are based on the imperialism they profess to be against. It helps that one can be against today’s racist wars - though not on the grounds of anti-racism, except of the most specious variety - while quietly accepting and utilising the racial inequities inherited from the racist imperialism of the past. As usual, reactionary thinking is dependant upon amnesia.
Engels eviscerated this deduction of ideological conclusions from supposedly disinterested maxims back in 1878, in his coruscating polemic against the anti-Marxist social democrat Eugen Dühring:
And when such an ideologist constructs morality and law from the concept, or the so-called simplest elements of “society”, instead of from the real social relations of the people round him, what material is then available for this construction? Material clearly of two kinds: first, the meagre residue of real content which may possibly survive in the abstractions from which he starts and, secondly, the content which our ideologist once more introduces from his own consciousness. And what does he find in his consciousness? For the most part, moral and juridical notions which are a more or less accurate expression (positive or negative, corroborative or antagonistic) of the social and political relations amidst which he lives; perhaps also ideas drawn from the literature on the subject; and, as a final possibility, some personal idiosyncrasies. Our ideologist may turn and twist as he likes, but the historical reality which he cast out at the door comes in again at the window, and while he thinks he is framing a doctrine of morals and law for all times and for all worlds, he is in fact only fashioning an image of the conservative or revolutionary tendencies of his day — an image which is distorted because it has been torn from its real basis and, like a reflection in a concave mirror, is standing on its head.
Dühring was a positivist, so his flavour of bullshit was scientific reductionism. But it’s telling how well you can apply Engels’ description to the Austrian anti-empiricists. Reductionism’s gonna reduct. It’s almost uncanny how the passage seems to predict Rothbard.
By this point in the book, we know better than to take this sort of “from first premises” reasoning as a sincere account of a thought process. Rothbard did not actually begin interrogating the consequences of individual liberty and then arrive with basilisk-like thrill at a complete economic system that would be routinely bankrolled by libertarians seeking validation despite its self-evident lack of even the merest vestiges of sanity before going on to provide the starting point for Mencius Moldbug’s conversion from libertarianism to monarchism.
But we also understand that this process isn’t simply about arriving at a predetermined conclusion. The urge for a blank slate is just as much about trying to create a system untainted by some form of error or another as it is about creating one that comes to a particular conclusion. But the urge is old, and possibly unsatisfiable. Rothbard, after all, is one of the later voices in the Austrian School. Its origins lie a century earlier, in the marginal revolution of the 1870s.
*
In 1867, Karl Marx published the first volume of Capital, his devastating critique of capitalist production. In 1871, the working people of Paris rose in revolt and seized control of their city, in the first proletarian revolution in history. Yes, the Commune was almost immediately put down, in a counter-revolution which involved mass murder, mass imprisonment and mass deportation... but even so, the spectre was well and truly haunting Europe. And then, from 1873 onwards, capitalism tumbled into what was called at the time ‘the Great Depression’ (a phrase which would have to be reused). You can almost hear their intellectual wing hunching over their books and balance sheets and financial papers mumbling “How can we claim capitalism is fair? Dammit, I’m going to get this!”
The solution they selected was marginal utility, which was simultaneously and independently developed by William Stanley Jevons, Marie-Espirit-Léon Walras, and Carl Menger. The fact that this idea occurred more less simultaneously to several men of similar social position at roughly the same time in history, is proof that something more complicated, more socially and historically embedded, than ‘individual human beings act’ is going on here. Menger was Austrian, and so were the major thinkers who picked up his distinctive iteration of marginalism. Hence, the Austrian School.
There is little evidence that the founders of marginalism were particularly concerned about socialism as such. Intellectually, the marginalists were responding to what they perceived - not unjustifiably - as deep problems with the classical labour theory of value (LTV). Having said that, the rejection of the LTV was undoubtedly a result of the continued rise and power of the capitalist system, and of potential challenges to it. Bourgeois economists already wished to deny the obvious: that capital exploits labour. Marginalism came to be adopted as a hegemonic ideology by bourgeois society because of its… well, its utility.
Utility is the benefit or satisfaction a commodity provides to a buyer and/or consumer. Marginal utility is the value to the consumer of an additional unit of the commodity. Marginalism thus sees value as determined by a consumer’s need or desire for a particular benefit or satisfaction, mediated by the supply of it.
For all the detours and distortions along the way, we can see a path leading from this to Rothbard’s declaration that “individual human beings act”. It’s based on the same rampant subjectivism, masquerading as disinterested rational deduction, that is the entire basis of bourgeois economics. Rothbard’s tradition simply takes it to an extreme… or rather takes its implications seriously.
As the Bolshevik economist Nikolai Bukharin points out in The Economic Theory of the Leisure Class, the isolated individual is a silly starting point because individual actions can’t really exist outside of social context. Bukharin argues that marginal utility is circular, because any individual’s subjective idea of value is always going to be based on the world the individual lives in.
Menger, in contrast with Walras and Jevons, rejected mathematics, arguing that economics should focus on essences rather than quantities - a view that essentially founded his distinct ‘school’, and which also served to make him the one of the trio whose implicit opposition to Marx ran deepest. But this view also meant that at the very birth of marginal utility there is a built-in schism, with Menger ending up as bourgeois economics’ equivalent of Salazar Slytherin. There is a great extent to which Menger would fail to recognise much of what has come from the school of thought he founded, but this beginning is nonetheless the basis of the Austrian School’s peculiar quiddity, that of heterodoxy arising from a more intense orthodoxy.
The other basis of the School is a response to socialism in all its forms. But even that wasn’t inevitable. The early Austrian School was actually subject to a split between left and right. The right won, but the split was transmitted. Even Hayek apparently had one of those quintessential left-wing ‘phases’ in youth that inoculates a certain kind of person for life. (Indeed, you could almost say the same of the Austrian School itself.) As late as the third volume of Law, Legislation, and Liberty (published in 1979, a long time after his youthful socialist phase) he makes noises about how Universal Basic Income may even be “a necessary part of the Great Society”.
What’s interesting about these concessions is that they are predicated upon the assumption that ‘the poor are always with us’. It’s only a short step from assuming this is true to wanting to make it stays true. The praxis of praxeology, one could call it.
For historically contingent reasons, the Austrian School was the strand of marginalism that took aim at Marx. But before we understand this, we need to know the outline of Marx.
Boiled right down, Marx sees value - in the economic sense - as a social relation created by capitalism. Capitalism makes human social labour (i.e. the labour we don’t do for ourselves) abstract by forcing it to be as efficient as possible, because inefficient production is not profitable. Employers need to compete for profit to survive. Labour is only profitable to the employer if it doesn’t go beyond the average amount of time it takes to make something under prevailing conditions, what Marx calls ‘Socially Necessary Labour Time’. Crudely, if your workers take an hour longer to make a widget than the average amount of time it takes to manufacture widgets, that’s a wasted hour which produces no profit, and hence no economic value. Such an hour is unproductive. It’s the overall amount of productive labour done - which is an abstraction - that forms the ‘objective substance’ of the commodity’s value in exchange. Life in capitalism is thus dominated by socially-produced abstractions. For instance, you are watched and timed when at work. Capitalism pays you for time, in which you are expected to ‘work’ in the abstract sense, in the sense of expending your ability to work, your ‘labour power’. You’re paid for hours, which are spent doing whatever you’re told. This system dominates your life as a dull compulsion. Also, the fact that you, the worker, do more labour in a day than you’re paid for – because, generally, you are paid about what it takes to reproduce your ability to work, not what it takes to buy everything you make or do in a day – you are being exploited. You create ‘surplus value’ by doing more work during the day than you’re paid for, and this goes into the pocket of the capitalist, and gets reinvested by him into production, thus into the system that exploits you. He has to do this, to invest in new machinery, etc, to make production more efficient and thus more profitable. Further ironies debauch from this, and we will look at them later.
The reader needn’t accept this account. The point is that it is neither a vulgar objective account nor a vague and subjective one. It admits that value is a mental construct, but one that is ‘real’ because it has a real social basis and real social effects. Value, for Marx, is neither a thing nor an essence, neither quality nor spirit. It is a social reality because of what humans actually do.
For Marx, socialism would be the transcendence of value. I prefer the more provocative phrase: the destruction of value. A socialist society, as Marx intimates throughout his writings, for instance in his Critique of the Gotha Programme, would not produce value – in the sense we have it now – because it would not produce socially for profit. It would not reduce all human social labour to abstract labour precisely because it wouldn’t have to make production as efficient, and thus as profitable, as possible. A socialist society, for Marx, would thus definitely not be a society such as the former USSR, or a UK run by Corbyn. It would not be a basically capitalist economy – complete with wage workers who produce commodities, and a ruling class who extract surplus value from those workers in the process of production – run by a socialist party at the head of a powerful state. In socialism as Marx conceived it, the working class would be in power because it would collectively control the means of production. The working class being the vast majority, there would effectively no longer be a ruling class in the old sense of an exploitative minority of bosses. The state being an expression of the power of ruling classes, in socialism it would wither away. Whatever you think of these ideas, they do not correspond to the caricature of Marx’s idea of socialism that is widely taken for granted.
The other thing to understand about Marx, whether you agree with him or not, is that he does not deduce his conclusions from axioms, as many – including, outrageously, his Austrian critics – have claimed. Indeed, he starts off doubting the LTV because of the same problems that caused the marginalists to doubt it. He discovers his renovation of the LTV from the practical example of capitalism, from workers struggles, and from long and hard study in the British Library.
Certainly, the opening of Capital uses a high level of abstraction in the description of the commodity and value. But Marx is using abstractions in order to gradually build up an increasingly complex picture. As Marx says in the Grundrisse, the vast series of notebooks he scribbled out as he prepared to write Capital, “…the method of rising from the abstract to the concrete is only the way in which thought appropriates the concrete, reproduces it as the concrete in the mind. But this is by no means the process by which the concrete itself comes into being.”
Marginalism, on the other hand, simply sets up abstractions and then mistakes them for reality. As a result, the orthodoxy in bourgeois economics which gradually arose from marginalism – now known as ‘mainstream’ or ‘neoclassical’ economics – became obsessed with mathematical models, devising ever more arcane ways to track consumer behaviour, supply and demand curves, etc. Theoretically detached from the objective and the material, and connected to business as a client, mainstream economics has become – to a large extent – an ideological discourse. So it has come full circle, fulfilling the basic aim of the hunt for a replacement for the classical LTV.
But, as noted, the Austrian version of marginalism that branched off from Menger is based on the rejection of mathematical models, and has thus always been schismatic. Clearly a form of bourgeois ideology, it is also curiously self-exiled. It can’t be of the same kind of service to business because it eschews the kind of technical analysis and modelling which mainstream marginalism has offered to capitalists. The mainstream has kept the Austrians firmly in the friend zone, only calling them when they want something. Many Austrian ideas have been adopted by the mainstream, but generally its policy recommendations have not – probably because, being based on an extreme form of market subjectivism, they are not useful to actually existing capitalism. This is not to say that it hasn’t had a profound impact on the real world. We owe neoliberalism to Hayek more than any other individual. (Gee, thanks.) But, as we’ll see, today’s capitalism is so unsatisfactory to the dogmatists of pure Austrian theory, so divergent from its axioms, that many of them consider it de facto socialism. And they are determined to do something about that.
Socialism was always their chief bugbear… but if we’re going to talk about Austrian theory, we must first issue a disclaimer. In an overview like this, it is inevitable that we’ll generalise. How can we not? But what is true of one ‘Austrian’ is not true of another. Its members believe all sorts of things, many of which are contradictory. The Austrian School has a built-in defence mechanism: it doesn’t really exist.
*
With a few notable exceptions, most mainstream marginalists have addressed Marx by not addressing him. For historical reasons, the early Austrians, under the leadership of Eugen von Böhm-Bawerk, were the ones who went on the attack.
Many of their most important ideas, especially those developed by Böhm-Bawerk, actually arose as responses to Marx. Böhm-Bawerk’s theory of ‘roundaboutness’ in production – a key Austrian tenet - is an attempt to explain profit without admitting the existence of exploitation. Crudely, Böhm-Bawerk claims that profit is, essentially, a reward for waiting. Since value is entirely subjective, and since we value what we have now over what we may have in the future, those who have goods but ‘invest’ them in production (rather than selling or consuming them now) are rewarded with profit. Profit is deferred gratification, if you like. How very Protestant.
You’ll notice something else: the theory is dependent on fetishizing the choices of people who have property. Capitalists choose whether to spend or save, and Austrians see the choice as fundamental to liberty. Liberty is thus, by definition, that which is enjoyed by those who have this choice to make. Freedom and democracy are inherently counterpoised, because a democracy is a society in which the mass of the population – who are, by definition, mostly without property – can shape policy so that it curtails the freedom of the propertied to make their choices.
In a free society – by their definition – the capitalists get to make their choices unfettered. The Austrians say that if unburdened by pesky ‘special claims’ - i.e. trade unions and welfare and governments – the choices of the propertied will pan out.
The Austrians – leery of the possibility of planning, which seemed to lurk in the neoclassical notion of market actors with perfect information – developed a conception of the market as a sort of information-carrying mechanism. It is not really individuals who know things; they just respond subjectively to what the market does. It is the market which contains and transmits information, via prices. The Austrians thus ramp up commodity fetishism – the tendency, identified by Marx, of capitalist society to grant ‘life’ to things that it produces – past even mainstream marginalism.
It’s worth stressing certain things here. The idea is developed to escape the idea of markets being comprehensible by individual people, and thus directable. The theory follows the ideological impulse. The faith in price signals then becomes central to the Austrian attack on planned economies, which – as we’ll see - was another instance of the ideology directing the theory.
For a philosophy supposedly based on human freedom, there is surprisingly little room here for real human agency. Individual human beings act, but they can’t direct the world – except blindly, in their own self-interest, and when themselves directed by market signals. And only some human beings’ actions are really significant anyway. But even here, the efficient managing comes down to responding to information we are fed by an impersonal and unknowable source of that might as well be God for all we can understand or influence it. The propertied will sometimes misinterpret the signals being sent. When this happens, the market will winnow out such mistakes via processes that, though often called Darwinian, are actually better described as Calvinist. As we will see, not only do Austrians consider this the best and only system, they also implicitly attach religious significance to it. Having ‘free will’ becomes all about interpreting correctly that which is revealed to us by an unseen higher power which, though essentially benevolent in effect, is actually impersonal, and ready to punish if displeased. The religiose affect is in perfect alignment with the praxeological method of revelation and scholasticism.
For the Austrians, democracy is to blame for capitalism going into crisis. Democracy breeds special claims by people who are not really concerned with making the choices that regulate the economy. The people without a big stake, the masses, thus destabilise the system. Democracy introduces things like central banks to monkey with the market. For the Austrians, this is where everything goes wrong. This is the fall; the expulsion from paradise.
Such institutions will lower the market rate of interest below the ‘natural’ (ordained?) rate. Run by public servants rather than entrepreneurs, by people who have to consider public opinion, such institutions will pander to a naive popular desire to keep market interest rates low in the cause of high economic growth. Governments will tend to expand the money supply and cause market interest rates to fall below the ‘natural’ rate of interest. The choices made by big capitalists will thus be imperfect because their ability to make reliable subjective judgements will be stymied. Market signals will be scrambled. The gnomic commandments of the almighty become inaudible. Overinvestment is the inevitable consequence of inflation (as the Austrians define it). It leads to what Austrians coyly call ‘lopsided production’.
This is the so-called Austrian ‘Business Cycle’. Boiled right down: crashes and recessions happen because central banks set interest rates too low. Easy credit results, which screws up market signals. Loaners go crazy. Bubbles inflate and burst. Such lopsided production can only be remedied via letting interest rates rise to their ‘natural’ rate. In other words, the Austrian prescription is: let the crisis rip. It will be harsher but quicker. The only cure for god’s wrath is to wait for the plague to exhaust itself.
Most mainstream bourgeois economists are scathing about all this. And yes, it’s rubbish. But there are some grains of truth to it, as Marxism is uniquely placed to notice. It is true that crashes come from within capitalism, that they are not the result of sunspots (metaphorical or literal). It is true enough that low interest rates take the brakes off loaning and borrowing, and thus artificially stimulate bubbles. But this is a by-product of the crisis, not the cause of it.
For Marx, ‘capital destruction’, which happens in the wake of every crash for obvious reasons, is also the main mechanism whereby capitalism recovers. There is literal destruction of capital, but more fundamentally there is destruction of capital values. Crudely, the big fish gobble up the little because the little go at bargain basement prices. This is how capitalism restores the rate of profit sufficiently to climb out of the depression into which – by Marx’s theory - the falling rate of profit has flung it. If this process is retarded – i.e. via easy credit – then the recovery is also retarded.
But it doesn’t follow, therefore, that Marxists support the Austrian position. Marx did not think the horrors of an unmitigated process of capital destruction were a just punishment that had to be endured so the system could right itself. He saw such processes as evidence that capitalism needed to be replaced, not that it needed to be left unencumbered. For Marx, capitalism, wracked by such endogenous crises, had become a fetter on the further development of human potential. To the Austrians, most humans – and their desire to avoid the miseries of crash and slump – are a fetter on the further development of capitalism.
More fundamentally, while the Austrians nearly have a point about credit and recovery, they are completely wrong about where crashes and depressions come from in the first place. The most basic and howling error in the Austrian idea of the business cycle is that capitalist crisis was a thing before central banks. I mean… game over, right? But, as is always the case with dogmatists, there are ‘explanations’. The Austrians enjoy an advantage here with their eccentric and idiosyncratic understanding of terms like ‘inflation’, and their assertion of the existence of things like the ‘natural’ rate of interest, etc.
Notice that all this has been derived from axioms about central banks, derived from axioms about what they think interest is, derived from axioms about how humans negotiate desire and time. The original axioms are based on taking a subjective view of certain people in a particular social and historical moment and generalising to infinity. The willingness to countenance the punishing cruelty of the unmitigated crisis is fundamental. Undoubtedly the callousness is formally derived from the axioms, but it is also a function of the privilege of those who display it. After all, it was the ignorant public - through their democratic institutions and big governments - that caused the crisis. Let them suffer the consequences. And if democracy threatens to get in the way of such measures? Well, that only goes to show what a bad idea it always was.
Though some marginalists have drawn social-democratic, liberal, or even left-wing conclusions from their theory, Austrian economic theory as we know it is inherently anti-democratic. Opposition to democracy is entailed by the Austrian view of how capitalism works. Democracy is the rule of the ignorant and selfish public. The state is this ignorant and selfish public’s tyrannical arm. Moronic majoritarianism wields unjustifiable power over the propertied, the entrepreneurs… people who are, for Hayek for instance, almost promethean artists in their special sensitivity and understanding. Socialism is thus the worst kind of tyranny. It is, as the Austrians understand it (and we have to admit that the history of ‘socialism’ has given some warrant for this misapprehension), the ultimate expression of statism. But they don’t hate statism because statism is undemocratic, but rather the exact opposite. They actually hate it because – as they see it – statism is democratic. They are, ironically, the unknowing cousins-beneath-the-skin of the ‘socialists’ they hate, and whose systems they declare unworkable: the Stalinists and reformists. Like them, they too see socialism as state-control of capitalism… it’s just that the Austrians characterise this as the unjust and damaging domination of the propertied by the propertyless. From this basis it is, of course, very easy to get to ‘white men are oppressed by political correctness’ – and, these days, they do.
Where their actual policy ideas fail to connect, they have tended to seek out common cause with the right on populist social and cultural issues. State socialism has been a nice big stick with which they have beaten the left. But the irony is that, while they are ultimately wrong to equate socialism – at least as Marx conceived it – with statism, they are right that socialism is about the power of the majority. It is just that they see this power being essentially identical with state power whereas Marx ultimately saw state power as the negation of such workers’ power. The Austrians railed against the evils and inefficiencies of the Stalinist state. But their real essential problem with such states was that they saw them as an attempt by the demos to control the economy.
But any economic theory which makes any concessions to the idea of state control over the economy – including monetarism! – is considered tyranny by the Austrians, at least theoretically. Indeed, to the Austrians, any such concession effectively is socialism. And it comes of a visceral horror of democracy.
This is, as we’ll see, the product of a market fetishism so profound that it borders on, and perhaps even stems from, the religious. But then isn’t religion, amongst other things, a set of metaphysical claims based on axiomatic presuppositions? There is at least one prominent modern Austrian, Peter Boettke, who, is also a Christian presuppositionalist.
As intimated, crisis, in this Austrian theology, is divine punishment. As in other such theologies, it can be avoided if sin is purged. In the Austrian view, this means scrapping central banks, scrapping money controls, scrapping any government economic planning. The means to achieve this must be the scrapping of democracy.
For Marx, however, capitalist crisis is inevitable. The core of Marx’s argument is his contention that there is an inbuilt tendency in capitalism for the rate of profit to fall over time, owing to the inescapable need for capitalists to make production more efficient by investing in technological innovation.
The details are complex and the theory has been, to say the least, controversial. But the reader needn’t accept it. The point is that it is the antithesis of the Austrian theory in many ways, despite the fact that the Austrian theory is at least an admission of the fact that crises happen… which, rather surprisingly, makes it an improvement on most mainstream economics, which tends to assume crises won’t happen and can’t happen… until they do.
A good dualism tends to be rooted in a similarity of some kind, and there is definitely a sense in which, though opposites, the Austrian and Marxist theories have more in common than either do with the mainstream view of crisis. At least neither refuse to stare into the eyes of the rampaging basilisk at the heart of capitalism. It’s just that, seeing the silver eyes, the Austrians don’t run… they smile.
It has to be admitted that there is a sense in which Marxists do the same. In both cases, the crisis is a confirmation of beliefs. In both cases, the believer sees the crisis as – in some way – a sign of the oncoming future. Endogenously unstable, irreformable, and ultimately replaceable; or perfect but for the artificial imperfections, forced on it by parasitic and unnecessary meddling. The Austrians are like the communists of the 20th century who, aware that Stalinist Russia had become a monstrous perversion, were still defending it as some form of ‘degenerated’ workers’ state... saying, in other words, it might be a monster, but it’s our monster. That’s what the Austrians and libertarians et al say about capitalism. Compromised, ruined, monkeyed with by statists and democrats and demagogues and special claims, etc, it’s a garden of earthly delights overrun with weeds. Weeds, of course, can be killed.
There is a wider point with special relevance to today. It doesn’t really matter if the Austrians have a point. It matters that they look like they do. In striking aesthetically at the heart of Marx – and thus of the most powerful socialist critique of capitalism – they strike powerfully at the heart of the idea of changing the world, at a time when the world desperately needs to be changed. And they have an audience. And a strategy. And these things have had, and are having, an effect.
But we need to look back into the past again. Our methodology is rooted in haunted traces and buried things, so let’s actually look at what happens when the vanguards of the Austrian School face off against the red menace.
*
In a polemic published not long after the posthumous publication of Capital vol.III, Böhm-Bawerk claimed that volumes I and III of Capital contradict each other when it comes to the matter of how values are transformed into prices. This claim was very influential among mainstream economists for a long time because, as Andrew Kliman says in his book Reclaiming Marx’s Capital, “it reflects their view that only price and profit, not value and surplus-value, matter in the real world”. Kliman goes on to note, in his polite way, that “[i]t has also been very influential among non-economists, probably because it is simpler than the subsequent critiques”. And yes, Böhm-Bawerk often comes up when people begin talking about what is arguably the longest running – and most damaging – controversy in Marxist economics, the issue known as ‘the Transformation Problem’. There is no doubt that, in the loose sense, Böhm-Bawerk founded this controversy.
However, although Böhm-Bawerk began the critical focus on Marx’s account of value/price transformation, the contradiction he supposedly detects in Marx is actually not the one that formed the basis of the long-running debate. That is really based on a different objection, stemming from the work of a Russian economist called Bortkiewicz.
Without wishing to sound paranoid, it seems possible that, Böhm-Bawerk having identified Marx’s account of the transformation of values into prices as a supposed weak spot, bourgeois ideology was simply unwilling to abandon its attack on that supposed weak spot, and simply changed weapons without a beat. Perhaps bourgeois ideology just couldn’t let go of the idea that someone had found a thread that, if pulled, would cause the revolutionary core of Marx’s entire critique to unravel. Sadly, for them, Marx had actually used the thread to find his way through the labyrinth, and pulling on it only lets the monster follow it back out.
The actual ‘transformation problem’ has been conclusively refuted by Andrew Kliman in Reclaiming Marx’s Capital. The point here is that it is misleading to credit Böhm-Bawerk – and thus the Austrian School - with the damage that was actually done to the intellectual reputation of Marxist economics by others.
Moreover, Kliman makes short work of Böhm-Bawerk’s actual claim, showing it to be based merely on his dodgy parsing of Marx’s text. This was pointed out by the Marxist economist Rudolf Hilferding (an Austrian in the sense of nationality only) in his devastating response, published hot on the heels of Böhm-Bawerk’s polemic.
As for his claim that Marx’s account is tautologous (again, very much not the basis of the transformation debate), Kliman explains that this is based entirely on unfounded assumptions of Böhm-Bawerk’s as to the nature of money, assumptions not shared by Marx.
Böhm-Bawerk’s wider critique of Marx involves many accusations that his system relies upon ignoring reality, upon unfounded assumptions, upon abstract reasoning, etc, but provides very little actual demonstration of such things. He is guilty of many of the crimes he ascribes to Marx. As Hilferding says, Böhm-Bawerk is essentially criticising Marx for having a bizarrely wrongheaded version of marginalism, and for basing his case on nothing more than coherent arguments from first principles… but of then being incoherent. He proceeds from this assumption, consciously or not, because he cannot see any other perspective.
We won’t prove or disprove Marx’s value theory here. The point is that Böhm-Bawerk’s objections certainly won’t conclusively settle it either - whatever is claimed for him.
But then I suspect that, in practice, at least for many of those who cite Böhm-Bawerk, the point is not whether Austrian arguments actually do or don’t demolish Marx, but rather that they sound good. Superficially plausible arguments that appeal to intuition and prejudice are the stock-in-trade of the online Austrian. Flourishes of impressive names like “Böhm-Bawerk” and “von Mises”, etc, provide a plausible-looking facsimile of demolition. And indeed, most people who chuck Böhm-Bawerk’s name around online fail to understand him and offer vulgarised caricatures of his arguments. But that’s poetic justice.
When it comes to Mises, Böhm-Bawerk’s pupil, there really is very little to talk about. He is one of those people who, though realistically little more than a footnote in the history of ideas, carries a glamour… but he is, essentially, a charlatan. A quack. Were it not for the fact that a subsequent line of thinkers in a distinct and cultish tradition have preserved and puffed his reputation, he would’ve been justly forgotten, the builder of yet another crackpot early-20th century philosophical ‘system’.
Mises wrote a popular book about how socialism as impossible and unworkable, as Hayek would later also do. The timing of publication was undoubtedly tied to the fact that, in 1920, it looked to most observers as if the infant Soviet Union was about to expire a mere three years or so after its birth. Mises was positioning himself to be able to dance on the grave of the world’s first workers’ state.
Mises asserts that public ownership, because it abolishes the capital goods market, means that there can be no determination of prices for capital goods, and therefore no way to determine the relative values of primary resources, and therefore no way to allocate them efficiently and rationally. This claim is patently outrageous coming from people who are putting it forth as a way of championing capitalism, a system that has brought us to the point where the richest eight men on the planet own as much as the poorest 50% of the entire human race, and which is literally pushing the planet to the point where it will very soon be unable to support human life.
But let’s take it seriously for a moment.
In simple terms, the argument – which, as will be clear, is derived directly from Austrian first principles - runs thus: a society must be able to allocate its resources efficiently by making economic calculations. To do this you have to know what the ‘primary factors’ - the big, important resources that form the basis of all production, such as land, steel, and capital itself - are worth, and thus the best use to make of them. You derive this knowledge from prices assigned by the market. But if such primary factors are communally owned, they are not subject to a market, which means they do not end up with prices which accurately reflect their values, thus making it impossible to calculate how to allocate them efficiently.
Mises’ observations - revived and popularized by Hayek in the 30s - sparked what became known as the ‘Calculation Debate’, a series of exchanges among economists between the two world wars. The debate is often misremembered as a debate between Austrians and Marxists. However, only one of the major participants on the socialist side was a Marxist.
The others all wanted to show that a case could be made for socialism within the assumptions of neoclassical economics. Consequently, the defence of planned economies involved taking lots of the assumptions of bourgeois economics at face value, and thus advocating (some say inventing) a form of ‘market socialism’. Indeed, the most significant rebuttal of Mises came from the Polish economist and diplomat Oskar Lange, who rejected the Marxian theory of value, and agreed with the neoclassical conception of prices.
Lange’s model involved a free market in labour and consumer goods (so workers still sell their labour power in return for a wage, and then spend their wages as they see fit), combined with a ‘Central Planning Board’ for allocation of primary factors. The Board would set prices (presumably based on prices inherited from capitalism) and, through a process of trial and error, adjust those prices according to ensuing surpluses and shortfalls. Such experiments would only have to be run a few times before mathematical models could be invented and used. Lange claimed that such a system would be at least as efficient - if not more - than free markets. (Lange, notably, was an early advocate for using computers, making his ideas a prototype of the “friendly AI runs the world” scenario.)
Lange et al were widely held to have decisively settled the matter. And, if you’re prepared to conceive of socialism in non-Marxist terms as a system of state-managed capitalism, and to consider these issues theoretically outside actual historical experience, they pretty much did.
Hayek retreated to a fallback position where he claimed that, while rational planning was theoretically possible, it was also unworkable because of the sheer number and complexity of the calculations the planners would have to make. Markets comprise millions and millions of prices, and every price is interdependent with every other, meaning every change entails millions of marginal adjustments. In a market, these adjustments happen automatically. A planned economy would set itself the task of doing all that ‘by hand’ as it were.
Hayek put his faith in entrepreneurs, whom he believes have a “tacit knowledge” of the market that cannot be expressed. One of the weird ironies here is that Hayek essentially implicitly admits that the Stalinist central planners were kin to the ‘entrepreneurs’ of free market societies, and yet while Hayek argues for the entrepreneurs getting to make the decisions because of their ‘tacit knowledge’, he argues against the possibility of the planners doing essentially the same thing. Underlying this is the implicit inability to imagine an economic system without some group in a position of decision-making authority. But planning need not be centralised and undemocratic. It might instead involve the mass of the population. Indeed, contrary to the assumptions of almost everyone - anti-Marxists and Marx’s supposed supporters alike - Marx makes it clear that the active, collective, and democratic participation of the working class in planning is not only morally desirable but practically essential to socialism – far more so than any legal change concerning who owns what. At the very least, the knowledge - tacit or otherwise - of the working class at large can be brought into the planning process. Indeed, this was Trotsky’s solution when he originally made the argument against Stalinism that Hayek is ripping off here! Deliciously, Hayek ends up – at least in some ways – agreeing with Marx over the ‘Marxists’.
In the end, Trotsky was right, and so, by extension, were Marx and Hayek (which was an enjoyably outrageous sentence to type): ‘really existing’ planning was centralised and undemocratic. Without the ‘tacit knowledge’ of workers in localities, planning broke down, replaced by top-down command which increasingly failed to keep in touch with reality. This is not the place to go into the nature and failings of the Stalinist system, but suffice to say: there is a lot of historical context left out of the above, and the more fundamental failures of such ‘state capitalist’ bureaucratic capitalist systems are - in one of the great ironies of history - powerful empirical confirmation of Marx’s theories of capitalism.
Summing up the debate, however, we should stress the following:
1. Mises’ categorical rejection of socialism (as he understood it) as impossible was plausibly rebutted - on its own theoretical terms - by Lange;
2. Hayek’s retreating points about complexity hit the mark (to an extent) when applied to centralised command economies, but these are far from the only kinds advocated by socialists… especially now;
3. The restriction of ‘tacit knowledge’ to entrepreneurs or planners (depending on which side you’re on) reveals that nobody in the debate was talking about socialism as proletarian democracy.
The Keynesian mainstream of the time was happy to adopt Hayek’s anti-planning arguments as an ideological defence against socialism, but rejected the rest of his worldview as surely as they did socialism. The enemies, the Austrians and the socialists, were left on the outside - together. But then the outside turned out to be the right place for Hayek to launch his offensive to rescue the system from itself. Hayek, thus ideologically armed with a critique of planning and statism, gathered his forces.
The mainstream of the time had blithely fostered the seeds of its own destruction.
*
Hayek famously wrote that he was not a conservative… and he certainly did not want to conserve the world as he found it: dominated by Keynesian state-intervention, and influenced by a confident and unionised working class.
Famously, Mrs Thatcher threw down a copy of Hayek’s The Constitution of Liberty during a heated cabinet meeting, while insisting “this is what we believe.” Thatcher, of course, remains an object of outright veneration for the Conservative party, which has, over the last few years, implemented neoliberal dogma so effectively that their austerity measures have, according to one study, killed 120,000 people in the UK.
In one form or another, neoliberal dogma has dominated Western capitalism for decades now. It still does, whatever one might hear. A few massive bailouts do not a return to Keynesianism make. Indeed, the whole idea is dependent upon the assumption that neoliberalism didn’t involve funnelling money to unaccountable private interests, which is laughable. ‘Taxation is theft’ has a grain of truth to it, like so much seductive bullshit.
The rhetoric about the failure of neoliberalism is, of course, a way to blame a particular set of policies rather than the capitalist system itself. But there can be little doubt that the particular set of policies in question were deeply implicated in the specific form and magnitude of the 07-08 crash, and the subsequent non-recovery. And, while some economies enjoyed superficial prosperity by several markers before neoliberalism ‘failed’, neoliberalism exacerbated the inequalities of capitalism. Production for the market being the problem, as Marx pointed out, of course the handing of unprecedented power to the market made everything worse.
While undoubtedly all this is the result of deep historical forces, none of it ‘just happened’. It may have been done by people acting at the head of vast social forces, but it was still done. Individual human beings acted. Hayek – courteous, civilised, a genuinely great intellect – has more blood on his hands personally than any of the other Austrians.
In 1947, not long after Hayek had published his own popular anti-socialist book The Road to Serfdom, he took the lead in founding the neoliberal project in the form of the Mont Pèlerin Society (MPS), which took its name from the Swiss village where it held its first meeting. This event brought together many currents and individuals within classical liberalism, including Hayek and Mises, and many others, such as Milton Friedman, the prophet of Chicago School monetarism.
The aim of the society was clear: to defend freedom and civilisation by defending the principles upon which they were obviously (to these people) based: private property and free market capitalism. The group felt that these things were under increasing assault. They felt that the progressive ideas which had become associated with liberalism were inessential, undesirable, and needed to be purged. They advocated a return to the laissez-faire and free-trade liberal economic policies of the past, and the purging of all the extraneous nonsense about social reform and equality.
It’s important to remember that this was pure ideological reaction. Social-democratic governments had, to one extent or another, both before the war and after, set about trying to change things - i.e. the ‘New Deal’ in America, the post-war British Labour government - at least partly in response to popular pressure. And the ‘alternative system’, state ownership in the ‘communist’ world, glowered over Western capital’s shoulder, making them scared of their own working classes with their irredeemable tendencies to ‘collectivism’, to paraphrase Milton Friedman.
For decades after the Second World War, the West enjoyed an unprecedentedly long boom under the constant stimulus of Cold War arms spending, during which capitalism could afford to buy off workers’ resentments with social spending. But the long boom started decaying, arguably in the 60s, and definitely from the 70s. Before this, key national liberation struggles against Western colonialism had been unprecedentedly successful. Millions of people across the Western world rose in struggles over civil rights, workers’ rights, womens’ rights, queer rights, and against war. By the late 70s, the capitalist world had been plunged back into recession. And the ideas of Hayek and the MPS were waiting to be picked up.
Again, this didn’t just happen. It happened because one of the avowed aims of the MPS was to disseminate their ideas in elite circles until they changed the political common sense of the people at the top. And it was specifically Hayek who devised the slow drip-drip dissemination strategy, winning over others at the conference.
A somewhat more direct route to neoliberalism was followed in Chile, with the 1973 CIA-sponsored military coup led by General Pinochet.
*
The Chilean junta wasn’t organized by the MPS or Hayek, but Hayek was undoubtedly a political and intellectual inspiration to it, and his colleague Friedman – with his ‘Chicago Boys’ - helped design it a new economy. Hayek himself became a confirmed friend of the regime. It’s worth remembering that, like the rest of the neoliberal project, the Pinochet coup was explicitly counter-revolutionary. It unseated Salvador Allende, the democratically-elected leader of a left-wing popular front.
In 1981, the MPS held its annual conference in Viña del Mar, Chile, the seaside resort where Pinochet planned his coup. They hobnobbed with the top brass and the big bankers of Pinochet’s dictatorship, along with the regime’s fellow-traveller intellectuals. They enjoyed the opera. They drank wine. Like any starry-eyed communist fellow-traveller of the 30s who’d just visited the Soviet Union and taken care to look at it only through the slim gaps between their fingers, they came away convinced that they’d glimpsed utopia. A utopia in which thousands of political prisoners had been, and continued to be, ‘disappeared’ into an institutionalised system of state-run torture, rape, and mass murder. Not that the MPS people denied the tyranny. On the contrary, they acknowledged and praised it.
Hayek later wrote to the London Times that he’d been unable to find anyone in Chile who didn’t feel more free than they had under Allende. This is unsurprising, given the circles he mixed in. Besides, by then Pinochet had any complainers rounded up and shot. If they were lucky.
Hayek wrote to Thatcher in ecstasy, recommending that she institute Chile-style policies in the UK. She responded that she’d love to, but they had this pesky thing called ‘democracy’ in Britain which would get in the way… especially, one suspects, since she was already sinking in the polls and ‘shock therapy’ (to use Naomi Klein’s phrase) wouldn’t help. In the end she found the solution to her electoral woes in some contrived blood-letting abroad, against - ironically enough - a South American country. She used jingoism to get herself re-elected by climbing a pile of corpses, and then used her mandate to declare war on “the enemy within”. This referred specifically to the miners, but more generally to anyone - especially anyone working class and organised - standing in the way of her unleashing as much of Hayek’s Chilean prescription upon the country as possible.
It’s worth noting in passing that, despite still being held up by ideologues as an example of free market economics rescuing an economy, Pinochet’s Hayek-and-Friedman-inspired policies actually drove Chile into an economic crash. This was only alleviated by a change of policy direction - including re-nationalising loads of the industries Allende had nationalised and which Pinochet had re-privatised after taking power. It was only after this that Chile started to become the success story that the free-marketeers still take the credit for.
But evidence isn’t a consideration, as we’ve established. Instead, the reasoning is from first principles, i.e. democracy leads to totalitarianism. Hayek gets this from Mises and reiterates it throughout his work. He sees central planning as the result of democracy, central planning as socialism, and socialism as inherently totalitarian. So he supports the authoritarian crackdown. As Hayek said in a 1981 interview with Renee Sallas of Chile’s El Mercurio newspaper: “I prefer a liberal dictator to democratic government lacking in liberalism.”
The Austrians have a history with this sort of thing. Mises served as an advisor to ‘Austrofascist’ dictator of Austria, Engelbert Dollfuss. Mises’ basic attitudes were similar to those of Dollfuss, who saw Nazism and Communism as the same, and Austrofascism as an emergency measure.
Hayek’s position is the dollfussian logic of Mises working itself out. In his apologia for Pinochet’s tyranny, Hayek is clear that it’s a stopgap, and all the fault of the left. The class nature of the ideology is clear when you remember that Hayek lambasted left-wingers who were prepared to countenance the idea of ‘temporary’ suspensions of democracy as ‘stages’ towards socialism.
Neoliberal praxis is thus based on Hayek’s extreme right-wing critique of democracy, itself based on that of Nazi jurist and legal theorist Carl Schmitt, whom Hayek praised. The logically consequent idea that emergency dictatorship may be necessary to preserve liberal society from democracy is in neoliberalism’s source code. Neoliberalism, contrary to myth, is an authoritarian ideology, committed to defending property and wealth by violence both physical and structural. This isn’t ‘because’ of Hayek in any crude way – unlike him, we must eschew the ‘great man’ theory of history – but he was a vector.
The Austrian School found its historic role, I suggest, in being an ideological centre of gravity to the right of the bourgeois mainstream. This is the position that enabled it to both influence the rise of neoliberalism and then become a stern ideological critic of actual neoliberal praxis from the right. Just as the original Austrian School was marginalism-but-more-so, its later form continues to serve capitalism by being fanatically pro-capitalism while also lurking at the extreme rightward fringe of capitalist society’s intellectual, ideological, and political range of what is acceptably avowable. Its position explains its role - similar to other iterations of extreme reactionary thinking - as a rightward drag factor. Capitalist society can allow such rightward drags to pull it their way at times of crisis. At such times, capitalist society ‘selects’ ideological positions which are available based on their comparative material and ideological strength in the context. If you like, it makes a subjective judgement of reaction’s marginal utility. The selection of marginalism as a new mainstream is itself an example of this. Similarly, 20th century capitalism, wracked by various crises, selected first statist government (in various forms) followed by, after more crises, neoliberalism. The Austrian School thus played its role beautifully.
The Austrians’ continuing position at the far rightward end puts them into near contact with fascism – which is the furthest ideological extreme of bourgeois ideology, and another resource for capitalism in time of crisis. This is why, in the age of neoliberalism, Austrian dogma metastasized into something extremely dangerous and reactionary: paleolibertarianism.
And we’ve arrived back at Rothbard.
*
Paleolibertarianism was a consciously devised mutation of libertarianism, concocted by the late-20th century’s most prominent devotee of Austrian dogma, Murray Rothbard, who had already done more than any other individual to popularize vanilla right-libertarianism in America.
Paleolibertarianism aimed to promote the relatively unpopular extreme free-market dogmas of libertarianism by joining them tactically to America’s powerful trends of post-60s reaction. It succeeded to a great extent. It pandered to, and (as far as possible) absorbed, extreme American cultural conservatism, racism, sexism, etc. It took a powerful place in the ecology of American reaction. It fed on the discontents of neoliberalism, and US imperialism, to achieve a quasi-rebellious presence in the mainstream of US politics, most of all in the person of Ron Paul. After Rothbard’s death, its own supposed retirement, and the ascendancy on the US Right of neoconservatism, it went undercover and seethed online… where, in the aftermath of the crash of 07-08 and the subsequent long slump, it bred with its close neighbour, American fascism.
We can thus trace a line directly backwards from Charlottesville to the Austrian School. This is not to say that the two are the same, or that the alt-Right ‘is’ Austrian, or that the alt-Right wouldn’t exist in some form if Menger had never been born. That’s the kind of crude, genetic fallacy reductionism one finds in Rothbard’s account of the history of economics, wherein he finds ‘precursors’ to the Austrian School all over the place, based on his assumption that the Austrian School is the summation of the history of economic ideas. The chain of events I’ve outlined is not the whole or sole explanation for the existence of today’s alt-Right. But it is undoubtedly an important and neglected part of the story.
If Hayek represents the wing of the Austrian School with the most direct links to actual material power, Rothbard is the most important link in any chain drawn between the Austrian School and the fringe right.
Rothbard was, essentially, the founder of anarcho-capitalism. We need only look at the chaos that neoliberalism has unleashed upon the world, to know that going even further down that route is not just morally wrong but also pragmatically crazy… assuming that the continued existence of the human species factors into our conception of what is generally desirable. Saying that without state interference the market would be free is like saying that without the soil, the vegetables you eat wouldn’t need washing. It is an entirely incoherent to reject state power from a capitalist perspective. You can’t seriously entertain anarcho-capitalist positions unless you’re… well, insane.
But frankly, libertarianism and its various flavours, is insane. It should be noted that anarcho-capitalists and other libertarians have actually been found debating on the internet whether or not it would be immoral to tax people to raise funds to prevent the Earth being destroyed by collision with a giant asteroid. And we’re not just talking about Reddit shruggalos. Sasha Volohk - Associate Professor at Emory Law School and contributor to the Washington Post, wrote: “I think there’s a good case to be made that taxing people to protect the Earth from an asteroid... is an illegitimate function of government from a moral perspective”.
And from the perspective of Rothbard and his followers, who shrugged off Mises’ utilitarianism, he’s right. Instead of utilitarianism, Rothbard bases his thinking on an ethical principle, a variety of ‘natural law’ or ‘natural rights’, inherited from Locke.
Locke’s theory of property basically held that it was permissible to appropriate unused land if you used it. This is, ironically, an obvious modern precursor to the LTV, which Rothbard professes to absolutely despise, to the point of writing a scurrilous attack on Adam Smith to accuse him of plagiarism.
Locke did not, of course, think that what native peoples did with their land constituted ‘use’. Nor did he mean that the people who actually worked the land owned it; he meant the employers of those people. Once again, the premises are carefully chosen to lead to the correct conclusion. And in this case, the conclusion was the moral justification for black chattel slavery and the appropriation of land from natives by white imperialists.
The dirty truth about Locke is, in essence, the dirty truth about classical liberalism: it arose from capitalism, and its project was to help create and legitimise the new forms of class and racial hierarchies generated by capitalism, and to provide theoretical and ideological justification for European capitalist imperialism… which many libertarians now profess to oppose.
There’s another large and obvious problem Rothbard should have with Locke’s idea of natural property rights: the fact that the whole concept of ‘natural law’ or ‘natural right’ is essentially derived from God’s law. But, as indicated, religious concepts run through Austrian thought. This is clear when Rothbard tries to use the fact that the medieval ‘late scholastics’ of Salamanca were proto-Austrians because they too believed in natural law. In fact, all he manages to (accidentally) prove is that his own ideology is still steeped in religious casuistry.
For all the bullshit, Rothbard and his theories proved a seductive mix. With its built-in aura of both the intellectually-elite and the non-mainstream, with its pretensions towards being anti-establishment, with its claims to brusque and impatient rationality mixed with a moral defence of liberty and property, Rothbardian reaction has an image that works. The hard-nosed defence of free markets has the right dose of machismo while also retaining a glamour of bespectacled, book-wormish intellectualism. But there are no sums to do, of course. Praxeology sees to that… along with serving the instinct to make reductionist statements about people based on the idea that they all have free will, a concept easily adapted to excuse whatever injustice needs to be excused. It’s free will, and also it’s always been like that; a classic reactionary contradiction that could be embraced unabashedly. The racism inherent here can be adapted silently, or not so silently, as strategy demands.
For a long time, the nearest thing to an organisational node for all this was, of course, the GOP, which is why so much effort was put into pushing that party in the right/Right direction.
And on that subject…
*
In his essay ‘On Social Sadism’, China Miéville recounts an occasion when
[a]t a debate between Republican candidates in September 2011, Wolf Blitzer, the chair, mooted the case of a hypothetical thirty-year-old uninsured man who becomes sick. ‘[C]ongressman,’ Blitzer asks Ron Paul, ‘are you saying that society should just let him die?’
‘Yeah!’ comes a shout from the audience. A smattering of applause. The shout is repeated, and again, and the applause grows.
Paul – a paleolibertarian – later clarified his position on Twitter saying that “[t]he individual, private charity, families, and faith based orgs should take care of people, not the government.”
Before his retirement, Paul used to have portraits of Mises, Hayek, and Rothbard on his office wall. Paul is a Senior Fellow of the Mises Institute, an avowedly Austrian institution which promotes praxeology, and which was co-founded by Rothbard, and financially backed by Hayek. He’s probably the most high-profile and widely respected of all the libertarians in American politics. Paul is a vocal supporter of Austrian economics and has advocated Austrian ideas in several books. He is famously committed to the policy of scrapping the Federal Reserve, in line with the premises of the Austrian Business Cycle theory. He’s also a vocal supporter of returning to the gold standard, a longstanding Austrian and libertarian notion.
Paul has run for the Republican Presidential nomination several times, and always attracted millions of dollars of donations, and a fanatical – often young – fanbase. He pitched himself to the young white men of the internet as a rebel right-winger, using libertarian ideas. His was to be a ‘Ron Paul Revolution’, storming the barricades for a paleolibertarian manifesto. The ideas were a concoction of small-government, ‘taxation is theft’, free-market rhetoric with hardline conservative stances such as opposition to abortion. The signature of paleolibertarianism is this very fusion.
No report on Paul would be complete without mentioning certain ‘newsletters’. In the words of Mother Jones:
Published as far back as the late 1970s, under various mastheads bearing Paul’s name (Ron Paul Political Report, Ron Paul’s Freedom Report, the Ron Paul Survival Report), the newsletters are, at times, virulently racist, homophobic, anti-Semitic, and conspiratorial.
Amongst other things, the newsletters contain warnings of a coming race war, whinges about black crime and welfare queens, attacks on Nelson Mandela, claims that gays are spreading AIDS deliberately, praise of white supremacist guru Jared Taylor, etc.
According to The New Republic, Paul made almost $1M from publishing these newsletters in just one year. To be fair, as almost everyone now acknowledges, Paul almost certainly didn’t write the newsletters himself, and now publicly rejects the sentiments in them. But he hasn’t given any of the money back.
The prime suspect in the newsletters whodunnit seems to be Lew Rockwell. Rockwell is the chairman and co-founder (with Rothbard) of the aforementioned Mises Institute. The Mises Institute is a major hub of right-wing libertarian organising and propaganda, and is currently the main agency propagating Austrian dogma. The Southern Policy Law Centre hesitates to call the Mises Institute a hate group, but it comes close, and lists myriad hate groups with which it has connections.
Yet another committed Austrian, Rockwell is also the man behind the modestly named website LewRockwell.org, which pumps out not only Austrian, right-libertarian and paleolibertarian material, but also repeatedly posts rather brazenly racist and white supremacist filth. Rockwell also co-edited the ‘Rothbard-Rockwell Report’ (or the Triple R, as it was affectionately known to its basket of paleodeplorable readers) with (no prizes for guessing) Rothbard.
Rothbard was open about calling for a culture war to alter American politics. He was quite prepared to make common cause with people like David Duke, as he makes clear in his essay ‘Right-Wing Populism’, written for the Triple-R in 1992 and now available on LewRockwell.org - and also, like so many of the pieces which appeared in those two venues, now collated in a book called The Irrepressible Rothbard. (Pardon me while I vomit.)
Duke, also praised in the Paul/Rockwell newsletters, is the former high-ranking Klansman who was recently seen ‘strengthening’ the ranks of the alt-Right when they coagulated at Charlottesville for a tiki torch rally and a spot of vehicular homicide. (It will be recalled that even Trump’s “many sides” comment was too mean for Duke to stomach.)
In the early 90s, Duke managed to insinuate himself into Republican politics in Louisiana and picked up a hefty share of the white vote down there. Rothbard was not scandalised by this but rather by the fact that people were upset by it.
Rothbard explains that there is “nothing in Duke’s current program or campaign that could not also be embraced by paleoconservatives or paleo-libertarians; lower taxes, dismantling the bureaucracy, slashing the welfare system, attacking affirmative action and racial set-asides, calling for equal rights for all Americans, including whites: what’s wrong with any of that?”
The leaders of Rothbard’s revolution would be the libertarians and the minarchists, and the troops would be the masses, spurred to fight the elites. And the spurring would take the form of appeals to racism. That’s the paleo strategy in a nutshell, and it was openly expressed by the nutcases who invented it. Rothbard called it ‘outreach to the rednecks’.
The result of victory would be the end of the oppression of whites. Whites are the real oppressed group these days, you see, because modern elites insist upon giving unfair advantages to non-whites, who just don’t deserve to do as well because genes or something. (Rothbard loved The Bell Curve, naturally.)
As is by now drearily predictable, Rothbard’s anti-statism goes out of the window when he pontificates about the need to crack down on crime. Give the cops free reign. “Get Rid of the Bums” he announces as an imperative. “Where will they go? Who cares?” Elsewhere he seems happy to countenance police using torture… because it’s all in the good cause of, um, anti-statism.
Various social issues, particularly the ones that are controversial because the Right want to use them to bash women, will be devolved to the local level, where federal courts cannot intervene.
Then there’s the Jewish Question. Let’s glide over some outrageously anti-semitic statements made by Rothbard (who was himself Jewish), and his defence of anti-semites and holocaust-deniers, and go straight for his description of himself as a “a pro-Christian Jew who thinks that everything good in Western Civilization is traceable to Christianity”.
Here we have – not coincidentally - a potted summary of most of the obsessions of the alt-Right. Again, this isn’t an accident. Individual human beings acted. A very conscious effort was made – by Rothbard and his associates – to push this kulturkampf until it connected.
What could be an easier test, today, than one’s attitude to the civil rights movement of the 60s? Rothbard hated it. He despised Martin Luther King. (He had more time for Malcolm X because, as he explained in the manner of an indulgent plantation owner, Malcolm acted white.) He was a vocal opponent of Affirmative Action. He called the 1964 Civil Rights Act “monstrous” and a “horrendous invasion of the property rights of the employer” in the course of a genuinely astonishing essay about the Clarence Thomas / Anita Hill case. Rothbard seems to have found the case fascinating, presumably because he couldn’t work out who he hated more: the (of course) tokenistic black candidate for the Supreme Court, the various cowardly politicians engaged in Thomas’ confirmation hearing, women in general, Anita Hill in particular, or the “Monstrous Brigade” of feminists. He gets the term from Reformation-era Protestant woman-hater John Knox. In the course of the essay he mansplains his way through every familiar iteration of anti-feminism: victim-blaming, disbelief, denial, paranoia, self-pity, persecution complex, misogyny… all spiced with racism, naturally.
(What is it with these fuckers and women called ‘Anita’? I guess it’s a case of ‘first as tragedy, then as farce’.)
This is the man described posthumously by his acolyte Hans-Hermann Hoppe as one of the world’s “intellectual giants” whose work put him on a par with Aristotle, Locke, and Kant. Here he is, vomiting forth sub-teenage MRA bile like he’s on 4Chan. And you can trace the entire thing back to a line at the start of his essay, before it escalates into a revealingly-hysterical tirade:
In short, "civil rights" are encouraged to ride roughshod over property rights. Whatever this is, it is leagues away from the rights set forth by John Locke and by the Founding Fathers.
We needn’t search for smoking guns proving his influence on today’s world because we needn’t postulate an easy cause-and-effect scenario. Rothbard, via his open project of agitation to push American conservatives in his direction, and to promote the idea of radicalising “the masses” to take up their ideas, has helped prepare the way for the general climate. The general climate then feeds back into the ability of LewRockwell.org etc to wield influence.
In the irrepressible Rothbard, always salivating and snickering at the thought of repressing those who deserve it, we can see Miéville’s ‘surplus sadism’, made quivering jowly flesh.
*
In an article at BleedingHeartLibertarians.com, Steve Horwitz, Austrian economist, and professor at St. Lawrence University, writes:
The paleo-libertarian seed that Ron Paul, Murray Rothbard, and Lew Rockwell planted in the 1990s has come to bear some really ugly fruit in the last couple of years as elements of the alt-right have made appearances in various libertarian organizations and venues. Back in February, alt-right hero Richard Spencer stirred up a fuss at the International Students for Liberty Conference in DC after being invited to hang out by a group of students calling themselves the “Hoppe Caucus.” Hans-Hermann Hoppe, long associated with the Ludwig von Mises Institute as well as a panoply of racists and anti-Semites, is perhaps the most popular gateway drug for the alt-right incursion into libertarianism.
Horwitz identifies as a ‘left- libertarian’, though this doesn’t preclude him from involvement with America’s extensive, millionaire-funded, far-Right, academic lobbying machine. But he’s uncomfortable with the way some libertarians are actively courting the alt-Right, and recounts with distaste the example of Jeff Deist.
Deist is the current president of the Mises Institute. Not long before the Unite the Right rally at Charlottesville, Deist delivered a speech to the 2017 Mises University entitled ‘For a New Libertarian’. Deist ended his speech with the following words:
In other words, blood and soil and God and nation still matter to people. Libertarians ignore this at the risk of irrelevance.
Blood and soil. In the summer of 2017.
Horwitz is disapproving. Most of the rest of us, I’d hope, feel our blood run cold.
In a piece published at Mises.org just after Charlottesville, Deist strikes a glumly patronising tone. His response amounts to a pompous reiteration of Trump’s belligerent blithering about polygons. But Deist must’ve known what he was doing. And if he didn’t know, he had no excuse for not knowing. His speech amounts to the Mises Institute courting a nascent fascist movement.
Richard Spencer, Mike Enoch, and Christopher Cantwell are all former libertarians and paleolibertarians who are now prominent on the fascist alt-Right. In a profile of Enoch which appeared in the New Yorker, Andrew Marantz writes
He began reading books by Ayn Rand, Murray Rothbard, and Ludwig von Mises, the grandfather of libertarianism. For a few years, he was an enthusiastic and doctrinaire libertarian. He started a blog called the Emptiness, where he wrote posts such as “Socialism Is Selfish” and “Taxation Is Theft.”
…
Within a few years, he started to wonder whether libertarianism was too tepid. After all, its premises pointed toward a starker conclusion: if the state was nothing but a hindrance to freedom, why not abolish the state altogether, leaving only the unfettered market? From there, he went even further. What if you couldn’t account for people’s behavior without considering their cultural background, and even their genetic makeup? “Slapped in the face by the reality of human bio-diversity,” he later wrote, “I had to come to grips with the fact that libertarianism isn’t going to work for everyone, and the people that it isn’t going to work for are going to ruin it for everyone else.” Human biodiversity: the idea that people are different, that they differ in predictable ways, and that some people—not just individuals but groups of people—might be inherently superior to others.
He thought he had carefully examined each of his beliefs, reducing them to their most fundamental axioms. But here was an axiom so fundamental that he hadn’t even articulated it to himself, much less subjected it to logical scrutiny. Now that he thought about it, he wasn’t sure why he should assume that all people were equal. Maybe they weren’t. If this was a textbook definition of racism, then so be it—maybe racism was true.”
Christopher Cantwell became notorious after his appearance in the Vice documentary about the Unite the Right rally at Charlottesville, and subsequently became known as the ‘Crying Nazi‘ owing to his reaction to imminent arrest for pepper-spraying anti-fascists. During his libertarian phase, Cantwell was enthusiastic about the ‘Free State Project’, a planned political migration of at least 20,000 libertarians to a state with a low population in order to create a utopia of small government, low taxes, etc. LGTOW, you could call it. Volunteers were required to sign a contract to move to New Hampshire as soon as the minimum number of recruits had been achieved. The irony of loads of libertarian right-wingers migrating, under contract, to forge their own state, doesn’t seem to have occurred to them. Nor to Ron Paul, or the Austrian economist Walter Block, or Peter Schiff, or LewRockwell.org and the Mises Institute… all of whom praised the scheme.
In a blog post published just after Charlottesville, Cantwell wrote that
I instantly became fascinated with the history, and economics that libertarianism taught. I later became a big fan of Murray Rothbard, and Ayn Rand. You might be aware, these people are Jewish. Shocking to some then, that I am today a rather vocal antisemite.
Cantwell is also a fervent admirer of the anti-democracy ideas of Hans Hermann-Hoppe. Like Hoppe, Cantwell is fond of jokes about free helicopter rides for leftists. Hayek would probably grimace at the vulgarity.
Cantwell got to ‘race realism’ via libertarianism. Via transcending it, or radicalising it, he says. This is a common theme among these people. They talk about transcending libertarianism, or growing out of it, of radicalising it, or finding alternatives to it. They are fascists now, but they got there via Rothbard, Rockwell, Hoppe, Paul… all directly ideologically descended from Mises. The disproportionate number of former-libertarians in American fascism is revealing because conservatives are far more numerous in America than libertarians, which suggests that libertarianism is statistically over-represented.
As noted, Moldbug is another admirer. “Mises is a titan; Rothbard is a giant” he says. Though irritable with Hoppe over his failure to commit to royalism, Moldbug cites him as a transformative influence.
The presence of libertarianism, avowed at various levels of understanding, at every point on the spectrum from the Mises Institute all the way over to the alt-Right on the streets of Charlottesville, is well-illustrated on YouTube – and this alone is sufficient evidence of its influence, its role as a vector.
The ‘Cultural Marxism’ conspiracy theory is enormously popular on this spectrum. Like anarcho-capitalism, it would be superfluous to debunk since it is ridiculous on its face. Nevertheless, it’s worth saying that, insofar as it attributes the origins of the conspiracy to the Frankfurt School, it isn’t just wrong - it’s exactly wrong. The accusation is that Cultural Marxists are deliberately putting anti-family, anti-male, anti-straight, anti-white, anti- capitalist messages (the only grain of truth here is the assumption that, in some sense, all these antis are compatible) into popular culture in order to erode the dominant - and of course proper - institutions and hierarchies of Western culture, with the ultimate aim being the imposition of communism. The trouble is that the Frankfurt School’s dominant current believed that revolutionary transformation of Western capitalism was now all but impossible, that the masses were no longer capable of becoming revolutionary subjects, and that this was attributable – to a huge extent – to the inherently paralysing and soporific effects of mass popular culture. Their critique of Hollywood, etc, has some points to make, but it ultimately collapses into a crude and deterministic elitism which sees the only possible ideological challenge to the suffocating web of ‘totally administered’ modern capitalism being high modernist art. And even there, Marxists cannot shape such challenges, they can only elucidate them through criticism. Far from doing this secretly or covertly, it must be done publicly. At every point, the Frankfurt School’s view is pretty much the exact opposite of that imputed to it by the Cultural Marxism conspiracy theorists. TL:DR? At no point in Dialectics of Enlightenment do Adorno and Horkheimer advocate bringing about communism in America via an all-female remake of Ghostbusters.
This is a perfect cameo illustration of the affinities I’ve been trying to demonstrate. The Cultural Marxism conspiracy theory now espoused across the alt-Right is a reiteration of what the (actual) Nazis called kulturbolschewismus, an idea central to Nazi dogma, about degenerate art and culture being manufactured by Jewish communists to undermine the unity of the German people. The resurrection and repackaging of this idea across a movement soaked in libertarianism is not surprising, because antagonism to socialism goes right back to the dawn of libertarianism, to the Austrian School’s foundational and self-chosen role as the intellectual foe of Marx.
The same tracks also lead to Peter Thiel, and to Vox Day - the fashy fantasy author himself, the swastika and sorcery man - who’s written Austrian-style tracts of his own. Indeed, like several other people, he seems to have had a go at appointing himself the alt-Right’s philosopher-in-chief. He defines the alt-Right on his blog Vox Populi in a series of theses (sounds like ‘theses’ anyway) in which he goes out of his way to say that various groups – neoconservatives, for instance – are not alt-Right before saying that the alt-Right is an alternative to libertarianism. Well, an alternative is not a negation. Alternatives are implied to be more-or-less equivalent. Later in the same article he unironically employs the fourteen words.
The only main substantive ideological difference between libertarians and the alt-Right is one that Vox accidentally highlights: the alt-Right tend to oppose absolute free trade because that means open borders. So, the alt-Right essentially is libertarianism, but modulated to fascist principles. This is not to say that the actual dogma of the Austrian School, or even of the MPS, is directly determining the content of alt-Right websites and chatrooms today. The point is the movement, in both senses. The movement as a nebulous chain of actors motivated by the same resentments and justified by the same dogmas, and also the movement of the political centre of gravity. This movement is possibly more dangerous than the fascists themselves. As we’ve seen more blood is on Hayek’s hands via his involvement with neoliberalism, which came into the mainstream via institutional means. Rothbard, who has so far only radicalised the fringe, isn’t even close. But, as also noted, the mainstream, the establishment, is open to the tug from the extreme.
*
The mention of Vox Day is usually where some idiot fan of his pops up in the comments section to say that you can trace direct roads from Marx to the Gulag, and it means as much. But the difference is straightforward: Stalin did a very bad job of implementing Marx’s ideas, whereas DWP claimants killing themselves is more or less exactly what Hayek wanted. But the larger point is that this is a book and doesn’t have a comments section. All the same, it’s worth shifting the magnification level on our emerging system to look at why the Austrian School takes to comment sections like Marxism to obscurantist self-published tomes, especially since this is superficially a very different approach to the disciplined ideological infiltration of the Mont Pèlerin crowd.
The rise of the online media that Austrianoidal, LibertAryan, and AnCapistani trolls thrive upon is directly linked not only to the decline of newspaper readerships, but also to widespread public disinterest in what newspapers are selling: more or less blatant propaganda. (This observation, of course, could come straight out of Moldbug… but then nobody deserves any prizes for noticing the obvious.) People might not necessarily formulate their objections to the content of newspapers that way, but they’re nevertheless absenting themselves from daily exposure to one of the main means by which the ruling class produce ideology and public consent. This is at least as big a concern to the people running the media as the need to claw back profits. Or perhaps more accurately, they simply don’t see much distinction between these two goals.
One of the methods which has evolved - largely in a self-organising way to start with, though connivance and subsidy increasingly play a role - is the evolution of the far-Right internet subculture. The reason it is usable is because it can flourish partly in and partly out of sight. Reactionary creepy-crawlies can swarm in semi-private chat rooms and forums, feeding incestuously on the extreme Right ideas expressed on open ‘news’ sites. Such sites can regularly peddle the most venomously extreme ideas in a manner which that looks - literally looks, as in ‘appears to the eye’ - to be ‘respectable’ and ‘normal’ and ‘mainstream’. Or, depending on their chosen identity, they can seem iconoclastic and rebellious. Or intellectual. One of the great advantages of sites like Mises.com and LewRockwell.org is that they can straddle this divide. Indeed, the alt-right obsession with “virtue signalling” is a characteristic bit of projection in this regard, mistaking the empty platitudes by which their propaganda masquerades as normative liberalism for the whole of leftist thought.
One of the many ironies here is that this methodology works because the sites, generally operating entirely online for free and thus not needing a distributive network and a pricing system, are largely freed from the strictures of the market. The far-Right, certainly when being open about what it is, has nowhere near enough traction amongst the masses of ordinary people to sell newspapers any more profitably than the dying giants. The rednecks you want to reach out to won’t buy the Journal of Austrian Studies, but they’ll follow links to Mises.org and Breitbart. But there’s another level to the appeal: even the most popular of fascist newspapers in the UK, the Daily Mail, faces declining circulation and an aging readership that’s only going to accelerate the problem. How do you disseminate far-right propaganda to younger age groups, especially the very young?
Once again, individual human beings acted. In cadres, of course. Far-right groups actively targeted online communities dominated by young white men in order to spread their ideology. The most famous of these is Stormfront’s infiltration of 4chan, where they recognized that the community’s embrace of “ironic” racism provided them an opportunity for ideological recruitment. Volumes have been written on the interconnection between forums devoted to pick-up artists, which claim that the secrets to successfully losing your virginity can be yours for whatever the price of their self-published ebook is (the secrets generally being “rape people”), and so-called men’s rights activists. In both cases, the strategy is to play on insecurities of young men in an age where there are mounting ideological challenges out there - especially on the internet - to their untroubled social privilege. Coupled with the twin legacies of decades of neoliberalism - increasing ideological and political disorientation, and a future far less secure than that which faced their parents and grandparents at their age - such challenges can terrify the semi-privileged layer of young, white, middle class men, who enjoy all those privileges without also enjoying actual material security. (This explains the otherwise inscrutable attachment to video games.)
And so the Right-wing internet - internally extreme and externally respectable, open to triangulation through a combination of slick public faces and anonymous private spaces, focused on the anxieties of younger people (especially male), a mutually-reinforcing echo-chamber of voices insulated from facts by the very decline of journalism that has allowed it to thrive - has evolved to fill an increasingly-vacant niche in the hegemonic ideological system of Western capitalism. In many ways, the classic role of what Owen Jones called ‘the Outriders’ - the populist propagandists of neoliberal extremism - has been taken over by this new seething online undergrowth of ultra-conservative vermin. They’ve fostered a tortured relationship with neoliberalism, and the neoliberal establishment, which allows them to condemn both with apparent sincerity while bolstering them with reactionary distractions.
As noted, this is a very different approach to the problem than the Mont Pèlerin Society’s small army of intellectuals and wonks. Sure, they’re still basically all nerds, but there’s a difference in audience. The first wave of neoliberal Outriders aimed for posts in academia and elite journalism, crafting a judicious combination of extreme rhetoric, analysis, pressure, and intellectual bafflegab in order to influence the actual halls of power. The basic story they spun was the same as the modern alt-right approach - a tale of left-wing domination of society destroying their freedoms. But with the decline of the establishment media the modern Outriders have found a new audience, at once grubbier and more ambitious: to bring the ideology to the populist masses no longer well-served by CNN or the Daily Mail.
Being, fundamentally, a degraded version of the media, the alt-right’s presentation of this ideological narrative is unsurprisingly theatrical. This extends not only to the “meme magic” approaches that resurrected an ancient Egyptian god of primordial darkness as a cartoon frog that causes people to get punched on national television, which can be understood as a sort of cargo cult re-enactment of the neo-Situationist techniques behind leftist groups like the Occupy movement, but to their stylized and ritualized “debate” with online liberals and feminists. These responses are a quasi-coherent miasma of assumptions, factoids, lazy misapprehensions of their chosen victim’s views, recited talking points and, in most cases, outright lying and distortion. But it’s arranged in a superficial parody of an actual scholarly, intellectual tradition based on an unslakable thirst for intellectual credentials giving rise to a whole ecosystem of Right-wing ‘atheists’ and ‘rationalists’, who lump feminism in with creationism as an absurd delusion, and claim to debunk feminism and other such ideas they hate using ‘logic’ and ‘reason’ and ‘facts’, etc. It’s a vast system run by imposters without a syndrome, fuelled by Dunning-Kruger. Paleo thinking, enabled by praxeo method.
To be fair to the Austrian School, the role it plays in this scenario is more-or-less as a brand with which some of today’s reactionaries identify (in the true style of the neoliberal theory of brands) rather than as an actual corpus of ideas with which to engage. But we’ve already seen that the ideas – intrinsically undemocratic – are why that works.
Such flat assertions of the proven invalidity of socialist ideas are hardly a million miles from the mainstream. But the added allure of the Austrian School as a rationale for such dismissals is that it provides all the things desired by the keyboard warriors of capitalism. Elite intellectual confirmation and support. The very phrase “the Austrian School” provides some of this; the syllables drip prestige. It can be imagined as part of a Manichean cosmology, diametrically opposed to the evil Frankfurt School (font of the evil Cultural Marxism conspiracy, as we know). The insistence upon using the ‘vons’ is still doing some work of aristocratic glamour (and how telling that so many of them were vons in the first place). And yet, as intimated, the Austrians, being heterodox economists and outside the mainstream, also retain - in the reactionary imagination - that tinge of the disreputable, the rebellious, the anti-establishment.
This is a trait in many reactionary movements actually. Many Thatcherites were attracted to the idea of themselves as rebels, as fanatics. The neocons (hated by libertarians, as it happens) liked and encouraged the (ridiculous) notion that they had some similarity to Trotsky. Steve Bannon declared himself a Leninist. Ron Paul declared himself the leader of a revolution. The right always apes the left. The attraction works upon those young fogeys who, while not wanting to challenge any of the fundamental problems with the world, nevertheless fancy themselves rebels and iconoclasts. They stress their differences with mainstream neoclassical economics, knowing that such pro-capitalist orthodoxy dominates academia and not wanting to be part of the mainstream, but also not wanting to depart too far from the pro-capitalist consensus. This works according to a dynamic similar to the one which insists that ‘social justice’ dominates the academic establishment while also being a melange of fringe lunacies. It is the very domination of most economics departments of academia, and the think tanks, and the policy units, by neoclassical economics that forces the reactionaries to focus on the supposed domination of the humanities by left-wing views, or ‘Marxism’ as they call all of it. The ambiguous position of the Austrian School - or rather the idea of the Austrian School that is projected onto the brand name - appeals to this desire to be both within and without the establishment at once.
Paradoxically, some of this is done by the (comparative) few economics departments and think tanks and policy units now dominated by Austrians and libertarians, funded by wealthy reactionaries like the Koch brothers. (Old libertarians, those two… though, ironically, they used to be so far on the ‘left’ of libertarianism that their baleful example was part of what spurred Rothbard and Rockwell to create the paleo strategy).
The long and short of this is that, ironically, the substance of the Austrian School’s opposition to Marxism has progressively faded over the century and a half since Menger (along with, to be fair, all other substance of the Austrian School) even as its explicitness increased. It is tempting to assume that this means the substance was always irrelevant - that anti-Marxism was always a symbolic function/visceral reaction. But then ideology is always aesthetic, and aesthetics are always visceral, and the guts squirm in response to terror. There is no contradiction between rational, class-based loathing of Marx, and irrational hysteria as a result. Plenty of reactionaries have been very sane about their loathing. You can do that when your mechanism for arriving at theories of material life is to openly just make shit up.
What’s going on here is still counter-revolution. Paleolibertarianism is a reiteration of the same spirit that animated the history we’ve glanced at. It is fighting against a world in which, under the surface, the mole of history is burrowing away from capitalism, or at least away from an untroubled acceptance of everything it entails.
Here, on the collapsing fringe of the anthropocene, Rothbard’s arguments – especially about the Monstrous Regiment - would just be condensed by someone with a Pepe avatar into a sub-140 character quip about Cultural Marxism. It was, after all, Rothbard himself who originated the argument that, essentially, Adorno invented feminism on behalf of the international Jewish conspiracy. YouTube etc. is just a bizarre squaring of that circle. But the point isn’t the praxeological substance; it’s that even here, as late capitalism rapidly runs out of afterparty, the rotting fruits of Menger’s labor can’t extricate themselves from their familiar opponent. Spectres gonna haunt, motherfucker.
But why? Why does this opposition recur no matter where the Austrian School tries to run? Why, for all that the Austrian School wants to be a bunch of edgy rebels, does it find itself endlessly drawn back into picking fights with an ideology that it constantly claims is inherently discredited?
Yes, obviously, part of it is that Marx is self-evidently correct, the Austrians know it, or at least have no excuse for not knowing it, and the cognitive dissonance obsesses them.
But the Austrians are wrong about lots of things (indeed, nearly everything), and it’s not as though their most degenerate fringes go around obsessively picking fights with statisticians. I mean, unless they’re women. Nor, as we’ve seen, do they have any issues with fascists and authoritarians, despite their ostensible devotion to freedom. They made that particular cog-diss constitutive of their cognition long ago. So why can’t they assimilate Marxism in the same way?
Again, it’s obviously partly because the class struggle continues, and Marx is still the guy who could best arm the other side. But Marxism clearly represents something more fundamental; a more primal challenge, existing on a deeper level than what any amount of economic debate can hope to address. The Austrians recoil from Marxism as from a hot stove – reflexively but purposefully.
Praxeology is, essentially, a mystical idea… or rather a magical one, in that it is about creating reality through talking about it. Marxism is about this too, in its way, but there is a huge difference. Praxeology is a story told to the ruling class to lull it to sleep; Marxism tells stories to try to get the working class to wake up. Does that sound like its own flavour of elitism? It can be. But there is yet another fundamental difference. Marxism’s stories are, ultimately, derived from the experiences and activity of the people it addresses. Marx developed his mature view of socialism because of the Paris Commune.
More to the point, though, this weird rivalry exists entirely on the Austrian side. Marxists, by and large, do not find Mises or Hayek to be their bogeymen of choice. Go to any Austrian site and you’ll find loads of ‘debunks’ of Marx. As ever, you wonder why something so self-evidently wrong needs to be constantly disproved. The Austrians are like those YouTube gamers who have to pwn Anita Sarkeesian six or seven times a day or they start to get anxious. But, tellingly, go to any Marxist site and you’ll be lucky to find passing mentions of the Austrians. So, while the obsession surely reveals some essential truth about Marxism, it will only ever be understood by looking at the Austrian School.
Why do these particular individual human beings act this way in particular? Could it be because, on some level, they know that the system which allows them to celebrate their rugged individualism is the same system that currently circumscribes life for the vast majority of the individual human beings on the planet, including – in a more comfortable way – them? They may not be compelled in the same way as a worker in an Economic Processing Zone in Asia, but they’re still compelled. Capitalism compels everyone. Even the people it privileges are compelled to compete against each other, and to thus repeatedly tip the world they own into chaos… a truth so terrible that almost nobody on the planet wants to know it. And it was their bogeyman who best described their predicament.
Or to put it another way:
Men make their own history, but they do not make it as they please; they do not make it under self-selected circumstances, but under circumstances existing already, given and transmitted from the past. The tradition of all dead generations weighs like a nightmare on the brains of the living.
Ironically, it is the dead tradition founded by the men who wrote that which – in a gothic style that would’ve pleased them – keeps rising from the grave to weigh like a nightmare on the brain of Rothbard… and we all know what zombies do to your brain when they catch you.
Are they hunted by the horror of the idea that they are a by-product? A by-product, moreover, that disproves itself? After all, the history and trajectory of Rothbard’s tradition can be seen as proof of historical materialism, in that they clearly demonstrate the class struggle, the rising of ideology from the economic base, ideas then becoming social forces, and the material dialectics needed to make all that happen. If the Austrian School did everything it has done just because individual human beings acted, then a remarkable degree of coincidence must’ve been operating. Their insistence upon arguing exactly that is probably quite telling.
Moreover, the process just sketched all took place in the shadow of Marx, because while marginalism probably would’ve happened anyway, the Austrian School as we know it never would’ve happened without Marxism.
Marx is the awful gothic horror interred beneath Rothbard’s shining praxeological edifice… but this doesn’t actually tell us very much that isn’t obvious. Perhaps slightly more interestingly, it turns out that, in the tradition of arch-enemies, Marx is also Rothbard’s creator.
Marxism finds itself in the embarrassing position of having indirectly brought about neoliberalism and Murray Rothbard… except that such determinism really won’t do for any Marxism which takes itself seriously. In any case, Marx revelled in paradox and his entire system is based on the idea that everything that moves does so because of internal contradictions. To accept the idea that Rothbard might be one of our Frankenstein’s Monsters is to just deal with a little more vestigial Hegel in our system.
But the Austrians are quite unprepared, psychologically, to handle the idea that Marx might be their real creator. Determinists, they might be seduced by the logic of the idea, yet it clashes with their iteration of determinism.
Marx, as ever, is fucking things up by just being there as a huge fact of their history.
*
Let’s return, yet again, to first principles: apparently, individual human beings act. As we noted, this is structured to be an utterly anodyne statement of conventional, classical liberalism. And yet we’ve seen very clearly that Rothbard is driving towards a very unconventional liberalism that is nowhere near as anodyne as the fundamental axiom wants to look. The axiom, in other words, is a basilisk of liberalism - a horror arising from some excessively fidelitous execution of liberal thought. But Rothbard is trying to play it cool - to make the argument without its horror becoming too apparent. So unsurprisingly, he sets about papering over the gap, trying to frame his argument so that the awful point of departure never gets noticed. Which, of course, means facing it up front, albeit obliquely.
Right after he makes his weird split whereby consciously chosen action is governed by separately defined values, he makes his first overt negation, entertaining the idea that “a person’s choice of values or goals is wise or proper or that he has chosen the technologically correct method of reaching them” in order to emphatically reject it. Not only does this make values even more bewildering (now they’re chosen too?), it’s a very strange to bring up in the first place. Surely nobody’s initial reaction to the statement “individual human beings act” is “so therefore I am a fearsome demiurge capable of accomplishing anything I wish.” Except, of course, somebody’s is: Murray Rothbard’s.
Having introduced this idiosyncratic theory, Rothbard proceeds to embrace its obverse, that “the individual actor adopts goals and believes, whether erroneously or correctly, that he can arrive at them by the employment of certain means.” But, of course, he doesn’t. Most of us at best hope we can, but recognize that even if we employ the correct means we are sufficiently buffeted by massive and uncontrollable external forces – not least economic ones - that there is no certainty or even likelihood that we will achieve our goals. The obvious thing to point out is that Rothbard is implicitly limiting the category of humanity to those of sufficient class and power to not be constantly and acutely aware of the desperate and contingent nature of actual life. Luckily, his intellectual tradition warrants this, but there’s a limit to how often it can be applied. The less obvious, but in some ways more profound thing is that having introduced an utterly bizarre viewpoint for the sole purpose of knocking it down, Rothbard doubles down and asserts that thinking this way represents the typical mind.
In its own tortured way, this is really nothing but a hysterical turning-up-to-eleven of the subjectivism built into marginalism, with its atomised but well-informed consumers who go around with preference scales in their pockets (literal or metaphorical), against which they measure every choice they make. The fact that most people don’t do this can always be subsumed into a kind of elitist contempt. Reactionary politics once again takes advantage of having a wide batrachian mouth, both sides of which may be used for talking.
Rothbard’s position at this point is highly unstable. He’s acutely anxious about the fundamental disconnect between actions and goals, but has committed himself to not fully seeing that disconnect - to believing that action and goal can become a unified concept if one is sufficiently good at avoiding error and selecting the right means. He needs to find something that can fit into that gap and allow him to maintain his needed ambiguity. To this end, he abruptly brings time into proceedings, noting that goals are displaced into the future, because “if all of a person’s desires could be instantaneously realized, there would be no reason for him to act at all.” He concludes that the future must be uncertain with similar reasoning, with an added shell game where he goes from “man does not have omniscient knowledge of the future” to “we live in a world of uncertain, or not fully certain future” without any intermediate steps. From this, he concludes that “man chooses to employ means according to a technological plan in the present because he expects to arrive at his goals at some future time.”
Clearly, despite living in an economic system that generates depression, Rothbard has never suffered from it or known anyone who has, as the assertion that man expects to arrive at his goals would be unjustifiable to anyone who has. But what’s really important is the way in which Rothbard selects a metaphysically necessary condition of human existence to displace all his anxiety about failure onto. The reason actions don’t lead inevitably to goals isn’t because there are complex material structures of oppression that heavily shape people’s lives, but because we exist in linear time. Not only does Rothbard not connect time to what dominates it for most people in capitalist society - work - but hilariously, he doesn’t even bother connecting time to its ultimate horror and constraint, death. And no wonder - nothing good would come of realizing action’s connection to the ephemeral nature of being, not least the fact that it blows a hole in the idea that action is necessitated by the non-instantaneous nature of goals as opposed to simply because we find ourselves restless during our long and inevitable slide from cradle to grave. Time instead remains purely abstract - a formal separation between action and goal that exists with no consequences beyond itself. The abstraction of time, enforced on humanity by the rule of capitalist production, is of course one of Marx’s major complaints. For the Austrians it is the basis of the rewards reaped by promethean entrepreneurs for their virtuous deferrals.
From here (and note that Rothbard has packed the strangeness thus far into a mere three paragraphs from “individual human beings act”), Rothbard asserts that the fundamental axiom also “necessarily implies that the means employed are scarce in relation to the desired ends, for if all means were not scarce but superabundant, the ends would already have been obtained, and there would be no need for action.” This is the same foolish argument that he uses to prove that we can’t see the future, and in neither case does it make a damn bit of sense. The former is in some ways the more bewildering of the two, partially because it’s applying this ridiculous reasoning to a seemingly self-evident point, but also because omniscient knowledge of the future would not prevent action by making it unnecessary so much as it would completely refute the idea of free will in the first place. The latter, meanwhile, reduces the lunacy to its pure form in the entirely unjustifiable assumption that there’s some alternative to action, as opposed to it being a necessary consequence of the interplay of consciousness and linear time.
Once again, the monster Marx is waiting at the end of the paragraph to remind Rothbard that purposeful action - i.e. labour - is the ultimate expression of humanity’s ‘species-being’, but is enslaved in class society; that the scarcity of class society is artificial; and that unalienated labour should be the greatest expression of freedom. To quote the monster directly: “Milton produced Paradise Lost in the way that a silkworm produces silk, as the expression of his own nature.” Marx would like all labour to be like that, and sees no fundamental reason why it shouldn’t. For Marx, that would be humanity returning to nature. In nature, time would just be the playground.
Indeed, Rothbard comes close to nervously realizing all this, observing that “even with the absurdly likely advent of Eden (or what a few years ago was considered in some quarters to be an imminent ‘postscarcity’ world), in which all desires could be fulfilled instantaneously, there would still be at least one scarce means: the individual’s time, each unit of which if allocated to one purpose is necessarily not allocated to some other goal.” This is a remarkable sleight of hand in which the obvious point about the interplay of time and conscious action is almost made, but linked instead to the idea of scarcity, with time being downgraded from necessary precondition for human experience to a mere commodity to be allocated, with the switch obscured by a hilariously undercooked musing on the idea of a post-scarcity economy.
It’s at this point that Rothbard makes his inevitable declaration that, because all of these conclusions are necessarily true implications of a self-evidently true axiom, they “cannot be ‘tested’ by historical or statistical means” and that furthermore “there is no need to test them since their truth has already been established.” Which, obviously, no it hasn’t because Rothbard’s argument is a shambolic mess. But more important is simply the fact that this is the moment in his argument where Rothbard finds it necessarily to hurriedly close the door to all objections that are not simply word games built around the ever-shifting vagueness that is “individual human beings act.” This rhetorical turn is one that could have gone anywhere - his paragraph transition is an overtly jarring “such are some of the immediate implications of the axiom of action.” And yet it’s here, immediately after his shell game with time and scarcity, that he suddenly decides that the most goal most urgently requiring his conscious action is informing his reader that arguments based on mere empiricism are invalid. Clearly there’s something to unpick here.
Were the praxeological argument a sincere account of Rothbard or Mises’s reasoning, this would be the point where all of the far-right lunacy becomes inevitable. But no; this is the point of the exercise. It is fair to characterize the three paragraphs of “immediate implications” of his axiom as a frantic drive to enshrine scarcity as a fundamental principle. This in and of itself is revealing: the first priority of praxeology is in effect to enshrine inequality and deprivation as basic facts of the universe of comparable ontological standing to time itself. Even if he’d done this well, it would very clearly be a dick move. But what’s really notable here is the odd tension between where the argument starts and ends. Yes, Rothbard’s entire goal here is establishing that scarcity cannot be overcome, but recall that he gets there from an assertion of strong individual determinism whereby we firmly believe that, if we can only manage to pick the correct course of action, we can achieve whatever goals we have. Again, this isn’t much more than a freshly tortured version of the old lies of opportunity and meritocracy, which can only stand up when supported by the lie of innate hierarchies. This is the real monster at the end of Rothbard: the same monster he started with.
It’s the one that highlights the fact that Rothbard’s combination is, obviously, acutely socially Darwinist: inequality happens, but only because some people make the correct choices while other people fuck up. And this is, ultimately, where Rothbard’s musings about uncertainty end up - one can consult Mises’s Human Action, which Rothbard is summarizing here, to discover that he describes the future as “hidden” and discusses the problem of prediction as one about “the incompleteness of our knowledge.” He speaks of the “ability to understand the future,” and even proclaims that “praxeological knowledge makes it possible to predict with apodictic certainty the outcome of various modes of action.” This clearly isn’t just “people believe they’re the masters of their destiny,” but a belief that the future is, if not entirely shapeable by human action, still something that a skilled operator can work with in total confidence.
This isn’t quite the recreation of Rothbard’s weird demiurge idea. The argument doesn’t necessarily require that we accept that people born into poverty have the ability to achieve their goals; the possibility remains that apodictic knowledge of their outcomes will simply result in the realization that no matter what they do, they’re basically fucked. It’s pretty clear that the Austrian School doesn’t even remotely care about this fact, but it doesn’t inherently contradict anything they say. But that is, in the end, the point, and one I’ve made before: they don’t care. That’s clear, in a sense, all the way back in the basic axiom, with its active foregrounding of the heroic individual acting upon the world, as opposed to the state of affairs that most actual people experience, which is mostly being buffeted around by various external forces, whether they be governments, history, or the class system. Indeed, “individual human beings are acted upon” would be every bit as justifiable an axiom as “individual human beings act,” if not moreso.
I would suggest that, whatever motivations might have originally existed for Menger’s swerve away from mathematics, this is for Rothbard (and very likely for Mises as well), the real point of praxeology’s anti-empiricism: it saves them the burden of having to pay attention to this fact. Empiricism requires looking at the world and all the things that happen within it, and they’d much rather stay in their cozy little realm of naval-gazing theory. Safely outside the circumstances not of their own choosing.
But Marx continues to haunt. It’s not really the class struggle, or even that Marx is their creator, which really imbues him with such power – as foundational as these things are. To work out what it is, we need to look not at what the Austrians realise about him, but rather what they take care to not realise. As ever, you know what people are most afraid of when you identify what they make sure they don’t know.
*
As noted, Marx’s real idea of socialism demanded the destruction of value. The Austrians do and don’t understand this. But they persistently define socialism as state ownership and management. As in the USSR, production in such systems is still of commodities, and by wage labour. So, the argument stays forever on the safe ground of whether managers can efficiently run an economy. This actually isn’t – for all the ink and blood spilled over it – a particularly hard question for anyone who’s ever had a boss to answer.
The Austrians are not, of course, alone in being unable to conceptualise the stateless and democratic version of socialism. But they have done as much, if not more, than anyone else to propagate this very conceptual impossibility – despite being right up close to Marxism, almost since day one. Again, here they resemble Stalinists. They have been hugging Marxism on the brink of the Reichenbach Falls for a century and a half, staring into its eyes, and have never really seen it. They have spent a long time grappling frantically and hatefully with that which they do not, and will not, look at. The essence of neurosis, of denial.
So, the very prospect the Austrian tradition recoils from in terror is one which it chooses to be incapable of conceptualising. But, of course, in order to choose to be incapable of conceptualising something, you have to already have some idea of it. The Austrians are marginalism’s version of the Weird.
As Corey Robin argues in his essay ‘Nietzsche’s Marginal Children’, Hayek and Mises have an essentially metaphysical view of the market, seeing it as the arena where all human morality, value, and worth are manufactured. The marketplace is the battleground in which we work out our desires and methods against ourselves, against unforgiving nature, and against others. It is where morality comes from, as well as freedom. It is literally what gives life meaning.
In this they resemble nothing so much as the radical and authoritarian Protestants who arose with, and championed, the rise of bourgeois relations in Europe during the Reformation - especially the Calvinists. With their ‘Doctrine of the Elect’, which looks like an early-statement of the ideological implications of Hayek’s ‘spontaneous order’, the Calvinists posit that our worth in the eyes of God is preordained, but we only discover it by striving. Thus the ideology reconciles meritocracy (you end up where you deserve to be) and predestination (you end up in the only place you ever could). The ideology arose to express the interests and worldview of a new bourgeois class. It makes sense that it should still be with us, espoused by the same class in power.
In the Doctrine of the Elect, hierarchy is based on inborn and unchangeable inequalities, but at the same time, if you’re doing well it’s down to your own superior achievements. God is the mechanism by which the selection is made; a kind of social market is the mechanism that reveals and rewards it. Thus, as well providing content to Hayek’s ‘spontaneous order’, it is the theological basis of Rothbard’s paleolibertarianism. It is the essence of how Rothbard reconciles his social-darwinistic schema with the religiose tendencies of his tradition. That this dogma is still alive is obvious. James Damore has a new career because of it.
So, relishing the perverse impudence and offensiveness (to some) of doing so, let’s – for a moment – seek to understand something of the psychology of the Austrian School using the ideas of the Frankfurt School, specifically the ideas of the Marxist-Freudian Erich Fromm. It’s another relishable irony that Freud was an Austrian who initiated a radically subjective system.
In Fear of Freedom, Fromm elaborates a dialectical account of human consciousness in late modernity through the prism of a dichotomous conception of the concept of freedom. For Fromm, freedom can be divided into ‘freedom from’ (negative freedom) and ‘freedom to’ (positive freedom).
The distinction between negative and positive liberty was famously pointed out by Isaiah Berlin in his essay ‘Two Concepts of Liberty’. The concept of freedom for most liberals, especially libertarians, and perhaps especially Austrians (since Hayek was the leading theorist of this), is essentially negative. Political freedom means little more than formal freedom from coercion. It has nothing to do with real freedom, which would be freedom from the structural inequalities and iniquities which deterministically dominate most lives under capitalism. Indeed, ‘individual human beings act’ is, as we’ve seen, designed to efface just this.
But Fromm says that ‘freedom from’ (FF), while desirable and often fought for, carries dangers within it. It is not a guarantee of happiness. Indeed, it can generate unhappiness, and then destruction. Essentially, Fromm’s idea boils down to saying that the absence of political or social coercion can be deeply unsatisfying because FF, being essentially negative, leaves us without ‘freedom to’ (FT).
Even if all coercion is removed, humanity in capitalism remains trapped in the corrosively hopeless condition of commodification. Fromm sees humans, semi-freed in the capitalist epoch, increasingly afflicted with the malaise of FF, as fleeing to authoritarianism, destructiveness, and conformity. He sees Nazism as, essentially, a response to this predicament. The application of this insight to much of what we’ve talked about in this essay is obvious.
Fromm brings up the rise of Protestant theology during the Reformation – particularly, as it happens, the ideas of Luther and Calvin – as examples of the development of ideas which express and respond to increases in FF. These striving bourgeois ideologies were authoritarian partly because they expressed the terror of new freedoms being brought to humanity by the very new system they expressed.
The Marxian “movement of the immense majority in the interests of the immense majority” is thus an unholy prospect. Such freedom, thus achieved, would also be – at least according to Marxism – the destruction of value, and thus, to some, of all moral choice. Socialism as Marx conceived it would be the abolition of the time-dominated abstraction of labour that forms the basis of value and is expressed in the market. Socialism would destroy time as we now know it. Where would be the (Protestant) virtue in such a society? There would be no deferral, no need for market efficiency, no domination of humans by the need for such things, and thus no ‘reward’ – hence Rothbard’s unconvincing insistence upon the opposite.
Marxism is thus the ultimate nihilistic heresy. Certainly, antagonistic class interests are at the material root of all this, but the root doesn’t tell you everything about the flower.
The project of Marx, which the Austrians take care not to know, is nothing less than radical freedom through the destruction of abstract labour, and hence of value. The prospect of the abolition of value, and thus also the capitalist market, thus presents, for some, nothing less than the extinction of all morality, all possibility of goodness. Freedom from the capacity to be good. It is the final destruction of the Protestant Misery Ethic, enshrined in ‘roundaboutness’, and also of the moral authoritarianism that provides a refuge from alienation.
The action of individual human beings is pathologically insisted upon by the Austrian tradition, because on some level there is blind terror of the idea of being free. Similarly, Rothbard and Hayek insist with peculiar intensity on their intellectual origins lying with Catholic medieval theologians. This is an attempt to evade the actual origins of their tradition in the fearful, authoritarian, bourgeois Protestantism of the Reformation. Rothbard borrows his anti-woman rhetoric from John Knox. When Rothbard says “everything good in Western Civilization” he means capitalism, so the “Christianity” to which he thinks it is traceable is the Christianity which arose with it and helped it ascend. The Austrians deny socialism’s real content by always perverting it, in their view, into an authoritarian structure which they love to ponder. The Austrians work tirelessly to institute their own tyrannies. Through libertarianism they are a vector of fascism.
The Austrians make a fetish of these things. They fetishize Marxism, statism, authoritarianism. What could be more characteristic of fetishization than that the object being fetishized – and perversely desired - is feared? Of course they fetishize Marx because they are afraid of him. But the real reason for this is that, more than anyone else, he showed the need for the destruction of that which, to them, gives the world meaning - and a method by which it might be achieved.
The freedom entailed by the destruction of value is the real terror. Freedom, after all, is the thing the Austrians fetishize most. It is the thing they fear the most. Fully realised, it would annihilate their concept of meaning. Their concept of meaning is thus ultimately revealed to be alienation. The Austrians are thus shown to be the ultimate ideological and moral expression of commodity fetishism – which give rise to them and then trapped them within itself. As such, their entire ontology is based on ‘freedom from’, because ‘freedom to’ is not only too scary a prospect to be countenanced… it is too scary to even be decently understood.
Is any of this actually true? Well, individual human beings act… so it must be.